Stocks slide on growth fears, dollar extends rally

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NEW YORK, May 9 (Reuters) – Stock indices around the world fell on Monday as the dollar pared its gains after hitting a two-decade high as oil prices fell amid concerns over rising interest rates and a tighter lockdown in Shanghai heightened investor fears of a global economic slowdown.

Oil prices fell on demand concerns amid continued coronavirus lockdowns in China, the world’s top oil importer. Read more

Yields on most US Treasuries shed their earlier gains to trade lower on Monday as bargain hunters stepped in after the benchmark 10-year note hit new 3.5-year highs due to fears of inflation.

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After Friday’s killer session in which U.S. equities sold off sharply as another rise in long-term U.S. Treasury yields unnerved investors, markets have had a rough start to the week.

Central banks in the United States, Britain and Australia all raised interest rates last week, and investors braced for further tightening as policymakers battle soaring inflation.

“Markets continue to reassess inflation risks as it becomes more evident that inflation is likely to be with us longer than some people had hoped,” said Chris Zaccarelli, chief investment officer at Independent Advisor. Alliance in Charlotte, North Carolina, too. citing growing risks of recession.

And he said moves by policymakers around the world to raise rates higher than expected will add to “economic downturn pressures that are already building up due to lockdowns in China and war in Europe.”

The Dow Jones Industrial Average (.DJI) fell 535.34 points, or 1.63%, to 32,364.03, the S&P 500 (.SPX) lost 102.07 points, or 2.48%, to 4,021.27 and the Nasdaq Composite (.IXIC) fell 399.65 points, or 3.29%, to 11,745.01.

On Friday, the S&P 500 and the Nasdaq recorded their fifth consecutive week of declines – their longest losing streak in about a decade.

The pan-European STOXX 600 index (.STOXX) lost 2.52% and the MSCI gauge of stocks across the world (.MIWD00000PUS) lost 2.54%, hitting its lowest level since December 2020 on Monday.

Emerging market stocks (.MSCIEF) lost 1.68% after MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) closed down 1.69%. The Japanese Nikkei (.N225) was down 2.53%.

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GLOBAL CONCERNS

There appeared to be no letting up on China’s zero COVID policy, with Shanghai tightening a citywide lockdown for 25 million residents. Read more

With investors juggling so many worries, one place they look for safety is the dollar.

The dollar index, which measures the greenback against a basket of currencies, rose 0.6%, hitting the latest in a string of 20-year highs. Read more

After paring gains, the dollar index was up 0.067% for the last time as the euro fell 0.17% to $1.0533.

The Japanese yen strengthened 0.21% against the greenback to 130.29 to the dollar, while the pound last traded at $1.2316, down 0.17% on the day.

The strong dollar also put pressure on Latin American equities and currencies on Monday. The Mexican peso lost 0.84% ​​against the US dollar to 20.33.

U.S. crude recently fell 4.35% to $105.00 a barrel and Brent to $107.87, down 4.02% on the day.

Gold prices retreated on Monday as high U.S. Treasury yields and the dollar’s rise to two-decade highs dented the appeal of non-performing bullion.

Spot gold fell 1.2% to $1,860.43 an ounce while US gold futures fell 0.94% to $1,863.50 an ounce.

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Reporting by Sinéad Carew in New York; Additional reporting by Tommy Wilkes in London; Wayne Cole in Sydney; Editing by Chizu Nomiyama and Lisa Shumaker

Our standards: The Thomson Reuters Trust Principles.

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