Global Markets: Stocks fluctuate as prices on rate fears, yields rise
European stocks tumbled and US stocks tumbled on Wednesday as outlook for rate hikes weighed on sentiment, while bond yields rose after beating expectations for the euro area’s GDP, the more hawkish European Central Bank. added bets.
Trading was choppy as investors await Thursday’s ECB meeting and Friday’s US consumer price data will highlight the dilemma facing investors as they weigh how tight central banks are on policy and inflation. It has effect.
Investors are concerned about the economic outlook and its impact on the results. Analysts at Citi Research cautioned that Intel Corp may pre-declare weaker-than-expected earnings for the second quarter. Intel shares fell 4.1%.
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The retailer cut its profit margin forecast on Tuesday after reporting a more than expected quarterly profit in May, hitting target markets. Other companies will follow and challenge the second quarter results, said Philip Orlando, chief equity market strategist at Federated Hermes.
“The market is rolling over here and during the next few months the 3800 level we saw at the beginning of May will at least resume, and it could go a little bit below that,” he said. He called the recent rally a dead cat bounce.
The pan-European STOXX 600 index lost 0.67%, while MSCI’s worldwide shares fell 0.02%.
On Wall Street, the Dow Jones Industrial Average fell 0.25%, the S&P 500 fell 0.22% and the Nasdaq Composite fell 0.21%.
The data shows the euro area economy grew much faster in the first quarter of this year than in the previous three months, despite the war in Ukraine, the EU statistics office said, as earlier estimates were sharply lower. was modified.
Investors placed their bets on a hike in ECB rates by September, and a 75 basis point rate hike in the money market.
US Treasury yields rose as GDP figures beat expectations, adding to more aggressive ECB bets.
The yield on 10-year Treasury notes rose 3.5 basis points to 3.005%.
The euro rose to a seven-year peak against the yen, with an upward revision buoyed by first-quarter growth. The euro rose 0.33% to $1.0734, while the dollar index fell 0.068%.
The dollar slipped for the second day in a row against a basket of major currencies but still managed to hit a 20-year high against the yen. The yen weakened to 134.47 per dollar, its softest since February 27, 2002.
The Organization for Economic Co-operation and Development downgraded its growth outlook to 3% this year from its 4.5% forecast in December and raised its inflation projections – though it said there was a limited risk of “stagflation”.
Asian stocks strengthened overnight, Chinese stocks saw some respite from the easing of COVID-19 restrictions, but sentiment was volatile and European indices fell soon after opening.
Japan’s economy shrank slightly less than it reported in the first quarter, as private consumption rebounded and companies rebuilt inventories.
German industrial output improved but grew less than expected in April.
Oil prices rose nearly 1% as US crude prices hit a 13-week high despite a rise in domestic crude inventories as China plans to ease lockdowns and Norwegian oil workers strike With this there was a possibility of a shortfall in supply.
US crude was up 1.53% at $121.24 a barrel and Brent was up 1.71% at $122.63 a barrel.