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US Futures and Oil Pullback After Big China Data Fail: Market Recap

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(Bloomberg) – U.S. stock futures fell and stocks faltered on Monday as poor Chinese economic data stoked concerns about the global outlook.

An Asia-Pacific stock index hit session highs, the dollar strengthened, Treasuries rose and oil slid, indicating a fresh bout of investor caution.

Chinese figures showed industrial production and consumer spending slipped to the worst levels since the start of the pandemic, hurt by Covid lockdowns.

Authorities are taking measured steps to help the economy: China effectively cut the interest rate on new mortgages over the weekend to support a struggling housing market, but the rate on one-year loans is remained unchanged on Monday.

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On the bond market, the US 10-year yield fell below 2.90%. A key question now is whether economic worries will help stem this year’s sell-off in Treasuries, which has been driven by inflation and tightening US monetary metrics.

Cryptocurrencies fell as the mood for stocks weakened. This took Bitcoin back towards the $30,000 level.

The risk of an economic slowdown amid pricing pressures and rising borrowing costs remains the primary concern for markets. Many traders remain cautious about calling a bottom for equities despite a 17% decline in global equities this year.

“Markets are defined as volatile, fragile and to some extent unstable,” with bonds again looking like a safe-haven asset adding to an “interesting mix,” Mahjabeen Zaman, senior investment specialist at Citigroup, told Bloomberg Television.

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Goldman Sachs Group Inc. Senior Chairman Lloyd Blankfein urged businesses and consumers to prepare for a U.S. recession, saying it was “very, very high risk.”

Growth in the United States

Business economists have downgraded their forecast for US growth this year and next – they now expect the economy to grow 2.4% this year and 1. 6% in 2023, compared to 2.6% and 2.2% previously.

Food and fuel prices are fueling rising costs. Wheat jumped by the exchange limit following India’s decision to curb exports.

Oil was rocked by the Chinese data but remains in sight of $110 a barrel. Shanghai is close to the threshold needed to ease its six-week lockdown, a development that could boost bets on rising energy demand.

Traders are also waiting to see how European markets react to Finland and Sweden’s efforts to join the North Atlantic Treaty Organization following Russia’s invasion of Ukraine. The shift in Europe’s security alliance could heighten tensions with Russia.

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What to watch this week:

New York Fed President John Williams speaks on Monday, with Fed Chairman Jerome Powell among the Fed’s list of speakers. TuesdayReserve Bank of Australia releases the minutes of its May policy meeting. Tuesday Meeting of G-7 Finance Ministers and Central Bankers. WednesdayEurozone, UK CPI. On Wednesday, Philadelphia Fed President Patrick Harker speaks. WednesdayPreferential rates for Chinese loans. Friday

Some of the major movements in the markets:

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S&P 500 futures fell 0.7% at 1:02 p.m. in Tokyo. The S&P 500 rose 2.4% on Friday Nasdaq 100 futures fell 0.7%. The Nasdaq 100 rose 3.7% on FridayJapan’s Topix index rose 0.1%Australia’s S&P/ASX 200 index rose 0.2%South Korea’s Kospi index fell 0.3%Hong Kong’s Hang Seng Index lost 0.4%China’s Shanghai Composite Index fell 0.5%

Currencies

The Bloomberg Dollar Spot Index rose 0.1% The euro was at $1.0395, down 0.2% The Japanese yen was at 128.87 to the dollar, up 0.3% The yuan offshore was at 6.8117 to the dollar, down 0.2%

Obligations

The 10-year Treasury yield fell two basis points to 2.89% The Australian 10-year bond yield fell five basis points to 3.36%

Merchandise

West Texas Intermediate crude fell 1.4% to $108.94 a barrel Gold was at $1,810.12 an ounce, down 0.1%

©2022 Bloomberg LP

Bloomberg.com

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