WASHINGTON/LONDON (Reuters) – European shares slumped to one-month lows and commodity prices fell on Monday on renewed concerns about rising interest rates and a faltering Chinese economy, while Wall Street stocks rose to recover their losses after Twitter agreed to be so. Billionaire Elon Musk bought it.
Fears of the coronavirus outbreak in China have already sparked investor fears that higher US interest rates could dampen economic growth. US stocks were lower for most of the session, extending last week’s sharp declines. CBOE Volatility Index (.VIX) Known as Wall Street’s fear gauge, it reached its lowest level since mid-March.
Twitter Inc (TWTR.N)Shares soared after news that Elon Musk, the world’s richest person, struck a deal to pay $44 billion in cash to the social media platform populated by millions of users and global leaders. Read more
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After news of the deal, Wall Street later reversed course from the rally by developing stocks, and the Nasdaq closed sharply higher.
Nasdaq Composite (nineteenth) It rose 1.29% to 13,004.85.
“You could tell the growth wanted to go up all day but the market was holding it back. The Twitter news came in and it was just a green light to start buying some of the growth names. They have been oversold for a while,” said Dennis Dick, a trader at Bright Trading LLC.
Earlier, the European STOXX 600 Index (.stoxx) It fell 1.8 percent to close at its lowest level since mid-March. Commodity stocks fell 6%, as global concerns overshadowed relief from the results of Sunday’s French presidential election that saw Emmanuel Macron outperform far-right rival Marine Le Pen.
MSCI Standard for Global Stock Markets (.MIWD00000PUS) It fell 0.41% to 668.85. Emerging market stocks (MSCIEF) It fell 2.61%. Overnight, Asian markets experienced their worst daily drop in more than a month amid fears Beijing could return to a COVID-19 lockdown.
“The stock rebound from the first-quarter correction has hit a wall of higher long-term interest rates,” Lisa Schell, chief investment officer at Morgan Stanley, said in a note.
“With the Federal Reserve talking of a faster and larger balance sheet cut than expected, real yields are close to zero in their very negative territory. With the 10-year US Treasury breaking 2.9%, the equity risk premium is
The euro fell 0.9%, near its lowest level in the session and its weakest level since the initial panic over the spread of the Corona virus in March 2020.
“The truth is that the story of the French election is more than yesterday’s Macron victory,” said Jane Foley, strategist at Rabobank FX.
France will hold parliamentary elections in June, and it seems likely that Macron will continue to push for a ban on Russian oil and gas imports across Europe, which could cause economic pain in the near term.
“We had German officials saying last week that if there was an immediate ban on Russian energy, it would cause a recession in Germany… and that would drag the rest of Europe down and have spillover effects on the rest of the world,” Foley said.
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The Chinese yuan slid to a one-year low, while Chinese stocks saw their biggest drop since the pandemic-led panic selling in February 2020.
The dollar index rose 0.65 percent and climbed to a two-year high. It touched a high of $1.0695 against the euro.
Investors are wondering how quickly and how far the Federal Reserve will raise US interest rates this year and whether that and other global pressures will push the global economy into recession.
This week will be packed with corporate earnings. Nearly 180 companies on the S&P 500 are reporting. Among the major US tech companies, Microsoft and Google report on Tuesday, Facebook on Wednesday and Apple and Amazon on Thursday.
In Europe, 134 of the Stoxx 600 will release results, including HSBC, UBS and Santander on Tuesday, Credit Suisse on Wednesday, Barclays on Thursday and Spain’s NatWest and BBVA on Friday.
“I wonder if just meeting expectations will be enough, it looks like we might need more,” said Rob Carnell, ING’s chief economist for Asia, referring to concern about big tech after a terrible report from Netflix last week.
China’s central bank set the midpoint of the yuan’s trading range at an eight-month low, seen as an official signal of a currency decline, and the yuan sold further, to a one-year low of 6.5092 per dollar.
The rising dollar pushed spot gold down 1.7% by 4:53 PM ET (2053 GMT). US gold futures closed nearly 2% lower at $1,896. Palladium prices fell about 10% on concerns about Chinese demand.
In oil, Brent crude closed 4% lower at $102.32 a barrel and US crude closed 3.5% lower at $98.54, its first close below $100 since April 11.
Eurozone bond yields fell.
Money markets are pricing in a 1 percentage point increase in US interest rates at the next two Federal Reserve meetings and at least 2.5 points for this year, which would be one of the largest annual increases ever.
This week will also see the release of US growth data, European inflation numbers and the Bank of Japan policy meeting, which will be watched for any hints of a response to the sharp drop in the yen, which has lost 10% in about two months. .
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Additional reporting by Bansari May Kamdar, Noel Randwich, Tom Westbrook; Editing by Bernadette Bohm, Catherine Evans, Mark Heinrich, Margarita Choi and David Gregorio
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