Following the underlying indices’ 11th decline in 13 weeks, contracts for the S&P 500 and Nasdaq 100 both fell by 0.3 percent. As dip-buyers started to show up, European stocks rose for the first time in four days. After news that the US may lower its tariffs on China, the dollar declined at the start of the US Independence Day holiday. As investors monitored domestic political tensions, Italian bonds fell.
Global stocks and bonds are experiencing their worst selloff in at least three decades as investors become increasingly concerned about the possibility of a US or even global recession. The Federal Reserve has little room to slow down monetary tightening, however, due to sticky inflation. Markets are faced with a trading challenge not seen since the late 1970s as a result of this toxic combination.
Stephen Innes, managing partner at SPI Asset Management, noted in a note that “the market has started to worry more about economic growth than just liquidity withdrawal and inflation.” “Compared to prior downturns, inflation is significantly higher and unemployment is substantially lower. Despite the sharp change in front-end rate expectations over the past week, these dynamics delay any potential dovish central bank pivot.
The worst year-to-date losses since at least 1988 were recorded by the global benchmark, the MSCI All-Country World Index, which fell 21% in the first half. The Bloomberg Global Aggregate Index of investment-grade debt suffered a 14 percent loss, which was its worst performance since 1990, the earliest year for which records are available.
The euro and British pound both increased by 0.3 percent on Monday as the value of the dollar fell. According to Dow Jones, US President Joe Biden could make an announcement this week about the removal of some tariffs on Chinese imports.
The Stoxx 600 benchmark increased 0.7 percent in Europe. The biggest gainers were in the energy, commodity, and travel sectors.
Prior to a meeting between Five Star leader Giuseppe Conte and Prime Minister Mario Draghi to ease weeks of political tension, Italian bonds fell. The country’s 10-year yield increased by 12 basis points to 3.21 percent, increasing the gap between it and German bunds to 1.90 percentage points.
Officials in China were attempting to quell a Covid flare-up that might affect a key economic area. That represents a further evaluation of Beijing’s plan to eradicate the pathogen through invasive testing and disruptive lockdowns.
Separately, one of the biggest dollar payment failures in China so far this year, developer Shimao Group Holdings Ltd., claimed it failed to pay a $1 billion note that was due on Sunday.
Bitcoin was just above the $19,000 mark while crude oil traded steadily around $108 per barrel.
what should I watch this week?
Tuesday’s rate decision for Australia
- PMIs are released for the euro area, China, and India on Tuesday.
- Tuesday’s US factory orders and durable goods
- Wednesday: FOMC minutes, US PMIs, ISM services, JOLTS job openings
- Thursday’s EIA crude oil inventory report
- James Bullard, the president of the St. Louis Fed, and Fed Governor Christopher Waller are scheduled to speak on Thursday.
- Thursday’s ECB statement on its June policy meeting
- June US employment report is due on Friday.
Several significant market moves include:
Stocks
- As of 6:48 a.m., S&P 500 futures were down 0.3%. Manhattan time
- The Nasdaq 100’s futures decreased by 0.3 percent.
- The Dow Jones Industrial Average futures decreased 0.2 percent.
- The Stoxx Europe 600 increased by 0.9%.
- The MSCI World index increased by 0.4%.
Currencies
- Bloomberg Dollar Spot Index decreased by 0.2%.
- The euro increased by 0.4% to $1.0451.
- The British pound increased by 0.3% to $1.2132.
- Japanese yen decreased 0.2 percent to 135.42 yen for one dollar.
Bonds
Commodities
- Little changed in terms of West Texas Intermediate crude
- Gold futures increased by 0.3% to $1,806.50 per ounce.
