Markets fluctuated on Monday as investors worried about a potential recession brought on by central banks raising interest rates to combat skyrocketing inflation.
Data indicating a rise in new Covid-19 cases in China have raised questions about the government’s decision to lock down cities and towns in an effort to eradicate the disease, despite the financial burden.
After the S&P 500’s worst January-June period since 1970, Wall Street started the second half off well on Friday, giving investors hope that banks won’t embark on a lengthy phase of monetary tightening.
That was followed by a decline in consumer confidence, which is a major engine of the top economy in the world.
In a commentary, he noted that while the data point to an impending slowdown in the US economy, there are currently no indications of a reduction in inflationary pressures. This is a crucial distinction because the Fed will keep up its aggressive tightening strategy until it sees evidence of the latter.
Statistics showed that eurozone inflation touched a new high of 8.6 percent in June, indicating the difficulty officials will have in restraining rising costs. This month, the European Central Bank is expected to raise rates for the first time in more than ten years.
Although price increases continue to be a major issue, Chris Weston of Pepperstone Group noted that people’s mindsets are “dramatic moving from inflation concerns to one where we’re now firmly focused on growth.”
Asia struggled while New York gave a huge lead.
As investors returned from a long weekend to make up for Friday’s losses, Hong Kong fell along with Seoul, Taipei, Bangok, and Jakarta.
Tokyo, Shanghai, Mumbai, Sydney, Singapore, Taipei, and Wellington, on the other hand, increased.
Although US futures were down in the opening session, London, Paris, and Frankfurt all increased.
A increase in new Covid cases over the weekend in China dampened investors’ spirits as they worry about a repeat of the agonizing lockdowns in big cities like Shanghai, which severely hurt the second-largest economy in the world.
Over 700 new illnesses were recorded throughout the nation on Saturday and Sunday after remaining below 50 each day for the preceding two weeks.
The weekend witnessed the first two Covid deaths in Macau, and officials announced they would be considering a city-wide lockdown to combat the disease. Shares of Macau casinos listed in Hong Kong fell sharply in response to the remarks.
Oil prices fluctuated as traders bet on a reduction in demand and the head of Asia at the world’s largest crude trading company Vitol said he saw evidence that consumers were starting to feel the weight of high commodity costs.
According to Mike Muller, “there is very strong evidence that the high prices, or what some refer to as demand destruction, are causing economic hardship.” It includes “liquefied natural gas as well as oil.”
– Key figures at around 0810 GMT –
Tokyo – Nikkei 225: UP 0.8 percent at 26,153.81 (close)
Hong Kong – Hang Seng Index: DOWN 0.1 percent at 21,830.35 (close)
Shanghai – Composite: UP 0.5 percent at 3,405.43 (close)
London – FTSE 100: UP 0.9 percent at 7,231.42
Dollar/yen: UP at 135.37 yen from 135.28 yen Friday
Pound/dollar: DOWN at $1.2116 from $1.2098
Euro/dollar: DOWN at $1.0424 from $1.0433
Euro/pound: DOWN at 86.03 pence from 86.21 pence
West Texas Intermediate: DOWN 0.1 percent at $108.36 per barrel
Brent North Sea crude: DOWN 0.1 percent at $111.51 per barrel
New York – Dow: UP 1.1 percent at 31,097.26 (close)