© Reuters. FILE PHOTO: Visitors walk past Japan’s Nikkei stock price quotation board inside a conference hall in Tokyo, Japan September 14, 2022. REUTERS/Issei Kato
By Amanda Cooper
LONDON (Reuters) – Global stocks fell on Monday after a series of blowouts in Ukraine’s capital and renewed concern over the economic outlook pushed investors into safe-haven assets such as the dollar and bonds.
Any belief that the Federal Reserve will take a looser stance on monetary policy was extinguished on Friday by data showing that unemployment fell in September, signaling a labor market not suffering from runaway inflation. .
The dollar held up against a basket of currencies, while a number of market indicators of investor risk-nervousness rose further.
Russian missile strikes during Monday’s rush hour across Ukraine killed at least five people in the capital Kyiv, in an apparent revenge bombardment after President Vladimir Putin said an explosion on the bridge towards Crimea was a terrorist attack.
“I had wondered if the markets were looking at the situation in Ukraine and thinking it was bringing us to an end – which was the first reaction to the progress the Ukrainian military had made this summer. That reaction is no longer happening and that is clearly seen as just an increase in tension, rather than the end of anything,” said Kit Juckes, head of currency strategy at Societe Generale (OTC:).
“We have geopolitical tensions and we are still on track to tighten monetary policy in the United States and the concern is still by the time they finish tightening, will they have tightened too much and let- they the economy quite vulnerable?” he said. added.
The MSCI All-World index fell 0.5% in early trading in Europe, down for the fourth straight day. The pan-European fell 0.5% to its lowest level in a week, while it lost 0.1% and fell 0.7%, making it one of the indices the least efficient.
fell 0.5%, while those on the Nasdaq lost 0.6%.
Wall Street sank on Friday after an upbeat payrolls report cemented expectations of another big rate hike.
Futures imply an over 80% chance of rates rising 75 basis points next month, while the European Central Bank (ECB) is expected to match that and the Bank of England rise by at least 100 basis points. base.
US consumer inflation is expected to have moderated to an annual rate of 8.1%, but the core measure is expected to have accelerated to 6.5% from 6.3%. US CPI data is due Thursday.
“We are in the midst of the largest and most synchronized tightening of global monetary policy in more than three decades,” said Bruce Kasman, head of economic research at JPMorgan (NYSE:), who expects increases of 75 basis points in the three countries. central banks.
“The September CPI report is expected to show moderation in commodity prices which is likely a harbinger of a broader slowdown in core inflation,” he said. “But the Fed won’t be responsive to a whisper of inflation moderation as long as labor markets are crying for tightening.”
Minutes from the Fed’s latest policy meeting are also out this week and will likely look hawkish given how many policymakers have raised their rate forecasts by points.
Although US inflation and the Fed’s response remain the focus of investors’ concerns, Eurozone government bonds benefited from the resumption of investor risk aversion.
Yields on the 10-year German Bund, which serves as a benchmark for the region, eased 3 basis points to 2.162%, while the more sensitive 2-year Schatz fell 8 basis points to 1.787% .
Adding another note of caution was the 2% drop in blue-chip Chinese stocks, following a survey that showed the first contraction in services activity in four months.
Corporate earnings also kick off on Friday, with JPMorgan, Citi, Wells Fargo (NYSE:) and Morgan Stanley (NYSE:) reporting the results.
“Consensus expects EPS growth of 3% pa, sales growth of 13% and margin contraction of 75 basis points to 11.8%,” Goldman analysts said. Sachs (NYSE:) in a note. “Excluding energy, EPS is expected to fall 3% and margins to contract by 132 bps.
“We expect smaller positive surprises in 3Q relative to 1H 2022 and negative revisions to consensus estimates in 4Q and 2023.”
The yen rose 0.3% to 113.14, leaving the euro down 0.4% at $0.9697 and the yen flat at 145.45, a hair’s breadth from the recent 24-year high of 145. .90 which prompted the Japanese intervention. [USD/]
The pound fell 0.3% to $1.10625, after the Bank of England announced a surprise decision to shore up the gilt market ahead of the end of an emergency bond buying program on Friday. . [nL8N31B0VI]
Oil fell for the first time in a week as investors took advantage of last week’s 11% rally after an agreement on supply cuts by OPEC+. [O/R]
fell 0.7% to $97.26 a barrel, while it fell 0.6% to $92.08 a barrel.