Gold price

Dollar Firm as Traders Mull Scope for Stock Bounce: Markets Wrap

Sep 23, 2022

(Bloomberg) -- Stocks wavered and US equity futures fell Monday as disappointing Chinese data buffeted markets, underscoring concerns about the global economic outlook.

Most Read from Bloomberg

  • Goldman’s Blankfein Says US at 'Very, Very High Risk' of Recession

  • $11 Trillion and Counting: Global Stock Slump May Not Be Over

  • Whereabouts of Terra’s Bitcoin Reserve a Mystery After Transfers

  • Terra Hasn’t Killed Crypto, But It Was a Narrow Escape

  • Ukraine Latest: NATO Embraces Sweden and Finland; Oil Gains

An Asian share index came off sessions highs, a dollar gauge firmed, Treasuries rose and oil slid, pointing to a fresh bout of investor caution.

China’s economy contracted in April, with Covid lockdowns dragging the industrial and consumer sectors to the weakest levels since early 2020.

China effectively cut the interest rate for new mortgages over the weekend, seeking to bolster an ailing housing market. The rate on one-year policy loans was left unchanged on Monday.

In the bond market, a key question is whether economic worries will help stem 2022’s Treasury selloff, which has been driven by inflation and tightening US monetary settings. The 10-year US yield retreated toward 2.90%.

Cryptocurrencies dipped as the mood in stocks weakened. That took Bitcoin back toward the $30,000 level.

The risk of an economic downturn amid high inflation and rising borrowing costs remains the major worry for markets, alongside Russia’s war in Ukraine and China’s Covid outbreak. Many traders remain wary of calling a bottom for equities despite a 17% drop in global shares this year.

“The markets are being defined as volatile, fragile and to some extent unstable,” with bonds again looking like a haven asset adding to an “interesting mix,” Mahjabeen Zaman, Citigroup senior investment specialist, said on Bloomberg Television.

Goldman Sachs Group Inc. Senior Chairman Lloyd Blankfein urged companies and consumers to gird for a US recession, saying it’s a “very, very high risk.”

The firm’s economists cut their forecasts for US growth this year and next -- they now expect the economy to expand 2.4% this year and 1.6% in 2023, down from 2.6% and 2.2% previously.

Food and fuel prices are feeding into rising costs. A move by India to restrict wheat exports saw its price jump by the exchange limit, illustrating how tight global supplies are. Oil held around $110 a barrel.

Geopolitical concerns in Europe related to the Russia-Ukraine war are likely to remain in the spotlight. Finland and Sweden moved toward joining the North Atlantic Treaty Organization, potentially amplifying tensions.

What to watch this week:

  • New York Fed President John Williams speaks Monday

  • Fed Chair Jerome Powell among slate of Fed speakers. Tuesday

  • Reserve Bank of Australia releases minutes of its May policy meeting. Tuesday

  • G-7 finance ministers and central bankers meeting. Wednesday

  • Eurozone, UK CPI. Wednesday

  • Philadelphia Fed President Patrick Harker speaks. Wednesday

  • China loan prime rates. Friday

Some of the main moves in markets:

Stocks

  • SP 500 futures fell 0.6% as of 11:20 a.m. in Tokyo. The SP 500 rose 2.4% Friday

  • Nasdaq 100 futures fell 0.5%. The Nasdaq 100 rose 3.7% Friday

  • Japan’s Topix index fell 0.1%

  • Australia’s SP/ASX 200 index rose 0.2%

  • South Korea’s Kospi index fell 0.2%

  • Hong Kong’s Hang Seng Index rose 0.1%

  • China’s Shanghai Composite Index fell 0.3%

Currencies

  • The Bloomberg Dollar Spot Index was steady

  • The euro was at $1.0395, down 0.2%

  • The Japanese yen was at 128.78 per dollar, up 0.4%

  • The offshore yuan was at 6.8082 per dollar, down 0.1%

Bonds

  • The yield on 10-year Treasuries fell three basis points to 2.89%

  • Australia’s 10-year bond yield fell six basis points to 3.35%

Commodities

  • West Texas Intermediate crude fell 1.5% to $108.90 a barrel

  • Gold was at $1,812.59 an ounce, up 0.1%

Most Read from Bloomberg Businessweek

  • What Happened When a Wall Street Investment Giant Moved to Nashville

  • Venture Capitalists Are Aiming to Disrupt Fish Farming

  • Crypto’s Fall, in Three Charts

  • Starbucks Baristas Are Unionizing, and Even Howard Schultz Can’t Make Them Stop

  • How Gillette Embraced the Beard to Win Over Scruffy Millennials

©2022 Bloomberg L.P.


Related Posts