Global equities waver, oil falls amid recession fears

July 12 – World stocks traded mixed while oil prices and bond yields dipped on Tuesday as traders fretted over prospects of further central bank tightening and worries about global economies’ health.

The dollar’s role as the safe-haven currency for investors concerned about the economic outlook has been burnished recently, with the U.S. currency roaring to two-decade highs against multiple currencies. At the same time, the euro sank within a whisker of parity with the dollar.

The pan-European STOXX 600 index (.STOXX) rose 0.49%, and MSCI’s gauge of stocks across the globe (.MIWD00000PUS) shed 0.22%.

The euro has been particularly vulnerable given the impact of an ongoing spike in natural gas prices on the regional economy, the war in neighbouring Ukraine, and the European Central Bank behind rivals in raising interest rates.

The dollar index fell 0.148%, with the euro up 0.12% to $1.0051, and the yen was not far off its weakest level in more than two decades.

Analysts are tempering their profit estimates as the earnings season starts in earnest this week, with reports from JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co, among others. read more

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According to a widely watched index published on Tuesday, German investor sentiment tumbled in July. read more

Economic data, including U.S. consumer inflation on Wednesday and comments from Federal Reserve officials, will focus later this week as investors look for clues on the outcome of the Fed’s upcoming policy meeting before the pre-meet blackout period.

A high inflation reading would pressure the Fed to step up its already aggressive pace of interest rate increases.

“It is a continued risk-off tone in markets and the anticipation that while maybe some of the pain is priced in, you still have inflation expected to accelerate tomorrow and the Federal Reserve with a lot of room to go on rate hikes,” said Ross Mayfield, investment strategy analyst at Baird.

On Wall Street, the Dow Jones Industrial Average (.DJI) rose 0.16% while the S&P 500 (.SPX) lost 0.15% and the Nasdaq Composite (.IXIC) dropped 0.13%.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) closed 1.04% lower, while Japan’s Nikkei (.N225) lost 1.77%.

Investors are also tracking how many Chinese cities, including the commercial hub Shanghai, are adopting fresh COVID-19 curbs to rein in new infections after finding a highly transmissible Omicron subvariant. read more

The surging energy cost in Europe is also a major fear as the most extensive single pipeline carrying Russian natural gas to Germany entered a 10-day annual maintenance period.

 Investors are concerned the shutdown might be extended because of the war in Ukraine, restricting European gas supply further and tipping the struggling eurozone economy into recession. read more

The yield on 10-year Treasury notes was down 3.1 basis points to 2.960%, dropping below 3% overnight as investors bought safe-haven Treasuries amid a sell-off on Wall Street.

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 3.1 basis points at 3.039%. Growth fears were weighing on oil, despite concerns about tight supply.

Oil prices fell sharply on Tuesday, pressured by the strong dollar, demand-sapping COVID-19 curbs in top crude importer China, and fears of a global economic slowdown. Gold was steady, with spot prices down 0.4% to $1,726.89 an ounce.

A high inflation reading would pressure the Fed to step up its already aggressive pace of interest rate increases.

“It is a continued risk-off tone in markets and the anticipation that while maybe some of the pain is priced in, you still have inflation expected to accelerate tomorrow and the Federal Reserve with a lot of room to go on rate hikes,” said Ross Mayfield, investment strategy analyst at Baird.

On Wall Street, the Dow Jones Industrial Average (.DJI) rose 0.16% while the S&P 500 (.SPX) lost 0.15% and the Nasdaq Composite (.IXIC) dropped 0.13%.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) closed 1.04% lower, while Japan’s Nikkei (.N225) lost 1.77%.

Investors are also tracking how many Chinese cities, including the commercial hub Shanghai, are adopting fresh COVID-19 curbs to rein in new infections after finding a highly transmissible Omicron subvariant. read more

The surging energy cost in Europe is a major fear as the most significant single pipeline carrying Russian natural gas to Germany entered a 10-day annual maintenance period.

Investors are concerned the shutdown might be extended because of the war in Ukraine, restricting European gas supply further and tipping the struggling eurozone economy into recession. read more

The yield on 10-year Treasury notes was down 3.1 basis points to 2.960%, dropping below 3% overnight as investors bought safe-haven Treasuries amid a sell-off on Wall Street.

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 3.1 basis points at 3.039%.

Growth fears were weighing on oil, despite concerns about tight supply.

Oil prices fell sharply on Tuesday, pressured by the strong dollar, demand-sapping COVID-19 curbs in top crude importer China, and fears of a global economic slowdown.

Gold was steady, with spot prices down 0.4% to $1,726.89 an ounce.

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