- Equity markets are starting the week across the world with significant declines.
- Despite risk aversion, Treasury bond yields continue to rise.
- The dollar remains firm, sharp drop in metals, oil and Bitcoin.
Wall Street futures point to a tough start to the week for US stocks. The negative climate continues to be predominant given the expectation of more monetary adjustment and while the war in Ukraine continues, inflation rises, China with restrictions due to COVID and global growth prospects worsen.
Fears intensify
After the falls of the past week, the shares do not raise their heads. S&P 500 futures lost 1.75% on Monday and Nasdaq futures lost 2.30%. In Europe, the main markets fell 1.75% on average, while in Asia the declines reached 3.81% in the Hang Seng.
The persistence of the negative climate is feeding back, with the same factors as in recent weeks, among which concerns about the monetary adjustment, the war in Ukraine and the restrictions in China stand out. Taken together, they create fears of possible recessions in developed countries.
The bad weather does not stop the sale of treasury bonds. Yields hit new highs in years, with the 10-year rate hitting 3.20%. This is one of the factors that keeps the dollar strong. DXY traded above 104.00 for a new high, before losing steam and pulling back.
The dollar’s biggest gains on Monday are against emerging market currencies, while it loses ground against the euro and pound. The South African rand falls more than 1% being one of the worst, while the dollar against the Turkish lira exceeded 15.00, reaching maximum since December.
The rise in yields continues to weigh on metals. Gold fell to $1,855, a one-week low and close to the $1,850 support. Silver, moved away from the lows in the last hour, but marked lows in months below $22.00. Oil too, with prices down more than 2.50%, and is not favored by global growth expectations.
Cryptocurrencies do not escape falls and lose ground. The Bitcoin it yields 3% on Monday and is at $33,000, after reaching the lowest prices since July 2021. Since the maximum it has lost almost half of the value.
The economic calendar shows calm on Monday. A larger than expected drop was reported in the Eurozone Sentix Investor Confidence Index. The focus will be on speeches by Federal Reserve officials, who are back on track after last week’s meeting. The key data will be on Wednesday with the US retail inflation. The presentation of corporate results follows. On Monday, among others, they report after the closing, Novavax and Zynga.
Technical levels
Source: Fx Street
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