U.S. stocks and stock futures plunge on recession worries: Market recap

(Bloomberg) – U.S. stocks and equity futures fell on Monday, hurt by a clouded economic outlook that is also dampening expectations of high interest rates and bolstering sovereign bonds.

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Asian stocks fell amid declines in Japan as well as Chinese tech stocks. The S&P 500, Nasdaq 100 and European contracts were in the red.

China’s ownership shares bucked the prevailing trend, pushing higher amid a report that officials are planning a fund to prop up struggling developers. The country’s real estate crisis is one of the major flaws in the global economy.

Australian debt jumped on the heels of a rally in Treasuries on Friday. The US 10-year rate was around 2.77%, erasing some of last week’s decline.

Investors have started betting that a slowing economic expansion, and perhaps even a recession, will moderate high inflation and ease the current cycle of monetary tightening that rocked global markets in 2022.

A dollar gauge fluctuated, oil slipped to around $94 a barrel and bitcoin weakened below $22,000, reflecting the cautious mood in the assets.

The Federal Reserve’s policy decision this week, along with earnings from Google’s Alphabet Inc. and tech titan Apple Inc., will help clarify prospects for a month-long rebound in stocks after the selloff. of 2022.

“We continue to see further declines for risky assets as recession fears mount and central banks remain determined to fight inflation at the expense of growth,” wrote Eric Robertsen, chief strategist at Standard. Chartered Bank Plc.

Trade tied to the dates of the Fed meeting results point to another 75 basis point interest rate hike on Wednesday. Expectations for the peak in the policy rate have moderated to around 3.4% by the end of the year. Cuts are then expected in 2023.

Bear Market Blues

“We don’t believe this bear market is going to end until there is evidence of bottoming in economic data or the Fed pivoting to a more dovish stance,” said Nadia Lovell, Senior US Equity Strategist at UBS Global Wealth Management. said on Bloomberg Radio.

The decline in business activity and the mixed performance of large corporate earnings left US stocks in the red on Friday. Treasury Secretary Janet Yellen said she saw no signs that the United States was in a broad recession. Former Treasury Secretary Lawrence Summers said a soft landing is highly unlikely.

Elsewhere, wheat rose as commodity markets digested a Russian missile strike on the seaport of Odessa that threatened to test a nascent deal to unblock Ukrainian grain exports from the Black Sea.

Here are some key events to watch this week:

  • Alphabet, Apple, Amazon, Microsoft, Meta gains expected this week

  • Bank of Japan Minutes, Tuesday

  • IMF Global Economic Outlook Update, Tuesday

  • Emergency meeting of EU energy ministers on Tuesday

  • Fed Policy Decision Briefing Wednesday

  • CPI Australia, Wednesday

  • US GDP, Thursday

  • Eurozone CPI, Friday

  • US consumer income, consumer sentiment from the University of Michigan. Friday

Some of the major movements in the markets:

Shares

  • S&P 500 futures fell 0.2% at 11:53 a.m. in Tokyo. The S&P 500 fell 0.9%

  • Nasdaq 100 futures fell 0.1%. The Nasdaq 100 fell 1.8%

  • Japan’s Topix index fell 0.7%

  • South Korea’s Kospi index rose 0.5%

  • Hong Kong’s Hang Seng index fell 0.5%

  • China’s Shanghai Composite Index loses 0.3%

  • Australia’s S&P/ASX 200 index fell 0.1%

  • Euro Stoxx 50 futures fell 0.8%

Currencies

  • The Bloomberg Dollar Spot Index remained stable

  • The euro was at $1.0211

  • The Japanese yen was at 136.16 to the dollar

  • The offshore yuan was at 6.7581 to the dollar, up 0.1%

Obligations

Goods

  • West Texas Intermediate crude was at $93.81 a barrel, down 0.9%

  • Gold was at $1,727.46 an ounce

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