Stocks and bonds fall; China Data Indicator Inflation Risk: Market Recap

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(Bloomberg) – Stocks and bonds fell on Monday on concerns over inflation and monetary policy tightening, while the euro was supported by the head of Emmanuel Macron in the first round of the election French presidential.

A gauge of stocks in Asia-Pacific was at its lowest since mid-March amid declines in China and Hong Kong, including a plunge in tech stocks. U.S. and European futures also fell, pointing to fresh challenges for global equities after the Federal Reserve signaled sharp interest rate hikes and a shrinking balance sheet.

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Ex-factory prices in China rose more than expected in March, underscoring pricing pressures rocking the global economy.

The 10-year US Treasury yield climbed to 2.72%, around the highest since 2019. Real yields are inching closer to turning positive, a development that could be a headwind for risky assets. The Australian 10-year bond yield hit 3% for the first time since 2015. A dollar gauge advanced.

The euro climbed as much as 0.7% against the greenback before paring the gain. This suggests some relief from the French election, but lingering mistrust, a backdrop that could later spill over to European markets.

Investors are worried about the implications of a victory for Macron’s nationalist rival Marine Le Pen amid war in Ukraine, given her longstanding sympathies for Russia. The question now is whether Macron can consolidate his advantage over Le Pen in the final round.

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Market sentiment continues to be shaped by the hawkish Fed and inflationary pressures resulting from commodity market disruptions caused by Russia’s invasion of Ukraine. Covid lockdowns in China threaten to exacerbate supply chain groans, further driving up costs.

“Hawkish minutes from the FOMC and ECB indicating a faster exit from the stimulus pushed global yields higher and widened spreads between countries,” wrote Subadra Rajappa, head of US rates strategy at Societe Generale, in a client note. “Nervousness around a tighter result of the French presidential election also contributed to this decision.”

Cleveland Federal Reserve Chair Loretta Mester said she is confident the United States will avoid a recession as the Fed tightens policy, although the inflation rate will likely remain above 2% l ‘next year.

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Crude oil fell on demand risks from a worsening Covid outbreak in China and an extended lockdown in Shanghai.

In the latest news from the war, Russia has appointed a new commander for its operations in Ukraine. Moscow is refocusing its war effort to the east, having failed to secure the territory around the capital, kyiv.

Russia has said it will halt bond auctions for the rest of 2022 due to prohibitive borrowing costs. The country’s first external default in a century now seems almost inevitable after Russia was sanctioned and isolated during the conflict.

In cryptocurrencies, Bitcoin was down, falling to around $42,100.

Events to watch this week:

Earnings season kicks off, including reports from Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Taiwan Semiconductor Manufacturing, Wells FargoChina CPI, PPI, MondayChicago Fed Chairman Charles Evans is due to speak Mondaybusiness ministers EU foreign meetings, more Russian measures on the agenda, MondayUS CPI, Tuesday OPEC monthly oil market report, Tuesday Fed Governor Lael Brainard, Richmond Fed Chairman Thomas Barkin due to speak, Tuesday Bank of Canada rate decision, Wednesday EIA crude oil inventory report, Wednesday Reserve Bank of New Zealand rate decision, Wednesday trade with the China, medium-term lending facilities, WednesdayECB rate decision, ThursdayBank of Korea policy decision, ThursdayU.S. retail sales, initial claims for unemployment insurance, business stocks, consumer sentiment from the University of Michigan, Thursday Loretta Mester, president of the Fed of Cleveland, Patrick Harker, president of the Philadelphia Fed, must take the speak Thursday in the United States. stock and bond markets are among those closed for Good Friday

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Some of the major movements in the markets:

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S&P 500 futures fell 0.4% at 10:54 a.m. in Tokyo. The S&P 500 fell 0.3% Nasdaq 100 futures fell 0.6%. The Nasdaq 100 fell 1.4% Japan’s Topix index lost 0.5% South Korea’s Kospi index fell 0.3% Australia’s S&P/ASX 200 index rose 0 .1% The Hang Seng index fell 2% The Shanghai Composite index fell 1.1%

Currencies

The Japanese yen was at 124.81 to the dollar, down 0.4% The offshore yuan was at 6.3699 to the dollar The Bloomberg Dollar Spot Index rose 0.1% The euro rose 0, 1% to $1.0887

Obligations

The 10-year Treasury yield rose two basis points to 2.72% Australia’s 10-year yield rose about two basis points to 2.99%

Merchandise

West Texas Intermediate crude fell 2.2% to $96.12 a barrel Gold was at $1,942.74 an ounce

©2022 Bloomberg LP

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