Stocks slide on growth fears, dollar extends rally

Stocks slide on growth fears, dollar extends rally

NEW YORK May 9 (Reuters) – Stock indexes around the world dropped on Monday while the dollar pared gains after hitting a two-decade high while oil prices sank as worries about higher interest rates and a tightened lockdown in Shanghai deepened investors’ fears of a global economic slowdown.

Oil prices slipped on demand concerns due to continued coronavirus lockdowns in China, the world top oil importer. read more

Yields on most US Treasury notes lost earlier gains to trade lower on Monday as bargain-hunters stepped in after the benchmark 10-year note hit fresh 3-1/2 year highs on inflation fears.

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After Friday’s bruising session in which US stocks sold off sharply as another rise in long-dated US Treasury yields unnerved investors, markets had a rocky start to the week.

Central banks in the United States, Britain and Australia all raised interest rates last week, and investors were bracing for more tightening as policymakers fight soaring inflation.

“Markets are continuing to re-price inflation risks as it becomes more evident that inflation is likely to be with us for longer than some people had hoped,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina, also citing increasing recession risks.

And he said moves by policy makers around the world to raise rates higher than expected will add to economic “slowdown pressures that are already building due to the lockdowns in China and the war in Europe.”

The Dow Jones Industrial Average (.DJI) fell 535.34 points, or 1.63%, to 32,364.03, the S&P 500 (.SPX) lost 102.07 points, or 2.48%, to 4,021.27 and the Nasdaq Composite (.IXIC) dropped 399.65 points, or 3.29%, to 11,745.01.

The S&P 500 and Nasdaq on Friday had posted their fifth straight week of declines — their longest losing streak in roughly a decade.

The pan-European STOXX 600 index (.STOXX) lost 2.52% and MSCI’s gauge of stocks across the globe (.MIWD00000PUS) shed 2.54%, on Monday hitting its level lowest since December 2020.

Emerging market stocks (.MSCIEF) lost 1.68% after MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) closed 1.69% lower. Japan’s Nikkei (.N225) had lost 2.53%.

world equity

GLOBAL CONCERNS

There appeared to be no let-up in China’s zero-COVID policy, with Shanghai tightening the city-wide lockdown for 25 million residents. read more

With investors juggling so many worries, one place they are looking for safety is in the dollar.

The dollar index, which measures the greenback against a basket of currencies, rose as much as 0.6%, hitting the latest in a string of 20-year highs. read more

After paring gains, the dollar index was last up 0.067%, with the euro down 0.17% to $1.0533.

The Japanese yen strengthened 0.21% versus the greenback at 130.29 per dollar, while Sterling was last trading at $1.2316, down 0.17% on the day.

Dollar strength also put pressure on Latin American stocks and currencies on Monday. The Mexican peso lost 0.84% ​​versus the US dollar at 20.33.

US crude recently fell 4.35% to $105.00 per barrel and Brent was at $107.87, down 4.02% on the day.

Gold prices retreated on Monday as elevated US Treasury yields and a surge in the dollar to two-decade highs dented the appeal of non-yielding bullion.

Spot gold dropped 1.2% to $1,860.43 an ounce while US gold futures fell 0.94% to $1,863.50 an ounce.

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Reporting by Sinéad Carew in New York; Additional reporting by Tommy Wilkes in London; Wayne Cole in Sydney; Editing by Chizu Nomiyama and Lisa Shumaker

Our Standards: The Thomson Reuters Trust Principles.

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