Recession fears dent stocks and weigh on US futures: markets wrap

Published by
Nonhlanhla P Dube


Stocks fell and US equity futures dipped on Monday, weighed down by a bleak economic prognosis that is also dampening expectations for peak interest rates and bolstering sovereign bonds.

Japanese and Chinese technology share declines weighed on Asian stocks. The S&P 500 and Nasdaq 100 futures fought to stay out of the red, while European contracts fell more than 0.5%. China’s property shares outperformed the market, rising on news that officials are planning a fund to assist struggling developers. The country’s real-estate crisis is one of the world economy’s major fault lines.

Australian debt rose in the wake of a Treasuries rally on Friday. The US 10-year yield was about 2.79 %, reversing a portion of last week’s decline.

Investors are hoping that a slowing economy, and perhaps a recession, will ease high inflation and soften the current cycle of monetary tightening that has roiled global markets in 2022.

The dollar index rose slightly, oil fell to roughly R1600 per barrel, and Bitcoin fell below R368K, showing a cautious tone across assets. The Federal Reserve’s policy decision this week, as well as earnings from Google’s Alphabet Inc. and technology giant Apple Inc., will help to clarify the outlook for a one-month-old stock rebound from the 2022 selloff.

“We still see further downside for risky assets as recession fears grow and central banks remain committed to fighting inflation at the expense of growth,” stated Eric Robertsen, chief strategist at Standard Chartered Bank Plc.

Swaps based on Fed meeting outcome dates suggest another 75 basis-point interest rate hike on Wednesday. The policy rate is expected to peak at around 3.4 % by the end of the year. Cuts are then predicted in 2023.

Bear Market Blues

“We don’t think this bear market is going to end until there’s some evidence of economic data nearing a bottom or a pivot by the Fed toward a more dovish stance,” Nadia Lovell, senior US equity strategist at UBS Global Wealth Management, said on Bloomberg Radio.

On Friday, US stocks fell due to declining business activity and mixed earnings results from big corporations. Treasury Secretary Janet Yellen stated that there is no evidence that the United States is in a general recession. Former Treasury Secretary Lawrence Summers believes a soft landing is exceedingly unlikely.

Wheat rose as commodity markets assessed a Russian missile strike on Odesa’s seaport, which threatened to put to the test a fledgling agreement to unblock Ukrainian grain exports from the Black Sea.

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Nonhlanhla P Dube

Nonhlanhla P Dube is a senior news reporter at Rateweb. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her directly by email at nonhlanhla@rateweb.co.za

Published by
Nonhlanhla P Dube
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