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Global stocks stumble as investors worry about inflation

Global equities, government bonds and oil prices slid on Monday as investors worried about the impact of rising interest rates and inflation in Europe and the US, and the coronavirus lockdown in China.

Wall Street’s benchmark S&P 500 fell 1.2 percent, led by technology and energy stocks. The tech-heavy Nasdaq Composite lost 2.2 percent.

Hawkish comments from Federal Reserve officials helped the S&P 500 post its first weekly decline in a month last week, and Mike Zigmont, head of trading and research at Harvest Volatility Management, said developments had picked up even on the Optimists “ruined the mood”. investors.

“Consider the fact that yields are back higher across the curve and you have a bearish environment,” he added. “Yields are going up, up, up, and wide-eyed stock optimists can’t ignore it anymore.”

The US declines followed losses in most of Asia and Europe earlier in the day. The pan-European Stoxx 600 Index slipped 0.6 percent, Britain’s FTSE 100 fell 0.7 percent after data showed the UK economy hardly developed in February.

In Asia, the Hang Seng China Enterprises Index of mainland China stocks slipped 3.8 percent and China’s benchmark CSI 300 index of stocks listed in Shanghai and Shenzhen fell 3.1 percent Effects of lockdowns imposed on Shanghai to limit the spread of Covid began to weigh on economic activity.

In government bond markets, the yield on the 10-year US Treasury bond, which supports global borrowing costs, rose 0.08 percentage point to a new three-year high of 2.78 percent. Yields rise when prices fall.

The yield on 10-year German Bunds rose 0.11 percentage points to 0.81 percent, the highest level since mid-2015.

The French markets offered a rare bright spot after the first round presidential elections over the weekend. Incumbent Emmanuel Macron is expected to defeat far-right rival Marine Le Pen in the final round of elections in two weeks, although polls suggest a closer race than 2017.

The Paris CAC 40 stock index ended the day 0.1 percent higher as the gap between French and German bond yields – a measure of the perceived risk of holding French bonds – narrowed.

The euro initially recovered against the dollar before falling back to a 0.1 percent gain on the day. “Overall, this is largely an expected result that will ease tensions in the FX market and bring some relief to the euro,” said Stephen Gallo, BMO’s European head of forex strategy.

Oil prices fell more than 4 percent, with Brent crude dipping below $100 a barrel for the first time in almost a month. West Texas Intermediate, the US oil marker, fell below $95 a barrel.

Plans to release record amounts of oil from strategic reserves and coronavirus lockdowns in China have caused the oil market to give up most gains following Russia’s invasion of Ukraine in late February. A period of extremely volatile trading since the invasion has caused the number of active futures contracts on Brent – also known as open interest – to plummet.

“Ongoing Covid lockdowns in China, coupled with coordinated US and IEA stock releases, are fueling capitulation in oil markets,” said Bart Melek, head of commodity strategy at TD Securities. “These forces have combined to alleviate the immediate short-term pressures experienced by self-sanctioned Russian kegs.”

https://www.ft.com/content/63701d22-e05c-4fd6-86f5-744067856905 Global stocks stumble as investors worry about inflation

Adam Bradshaw

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