The S&P 500 was on track to launch in the bear market, while global equities plummeted and fears of inflation swept investors around the world, boosting bond yields.
The futures for the S&P 500 fell 2.2% on Monday. At the close of trading on Monday, the bear market will push a decline index of more than 1.3%, which is defined as a 20% loss from the recent rise. Contracts for the technology-focused Nasdaq-100 entered the bear market in March, down 2.8%. The futures of the Dow Jones Industrial Average fell 2%.
Markets are volatile this year as investors assess risks Rising inflation And the schemes of the Central Bankers Eliminate trigger policies This left economies and markets afloat throughout the epidemic. The latest fluctuation comes after US consumer prices rose 8.6% in May on Friday, the fastest rise since 1981. The report forced many to resume expectations of higher interest rates from the Federal Reserve.
“Excessive expectations have further shattered investors’ nerves and shows how difficult it is to try to cover up inflation,” said Susanna Streeder, a senior investment and market analyst.
“The concern is that inflation is too hot for central banks to handle, and that they must provide economies with cold water in the form of a tight policy.”
The central bank will begin its latest two-day policy meeting on Tuesday, and most investors expect the central bank to announce its benchmark interest rate hike of half a percentage point on Wednesday. But expectations that the central bank will be forced to move even more aggressively this year have risen since Friday’s inflation report.
On Monday, futures traders showed a 78% probability that the central bank would raise interest rates by 2.5 percentage points by the end of this year, according to the CME group. That would equate to a half-percent rate increase at every central bank meeting this year.
On Friday, traders put the odds at 50%, according to the CME panel.
U.S. technology stocks, which had been high throughout the epidemic, set for a major slump on Monday.
Shares fell 2.8% in freemarket trading
The shares lost 3.4%. Chip maker
It lost 4.3% in pre-market trading
Decreased by 2.7%.
Facebook’s parent company lost 3%.
Todd Morgan, head of Los Angeles-based Bel Air investment advisers, said: “This is what you call the bear market.
Still, Mr. Morgan said improvements over the next month or two could help ease wet inflationary pressures, such as lower petrol demand after the summer and lower mortgage rates as demand for housing increases.
“The opening of China is a big deal,” he said, because it would help ease supply chain barriers. Last week’s figures showed Chinese exports to other parts of the world Rose in May Govt-19 relaxed restrictions there, adding to the signs of economic recovery.
Where does inflation hit Americans’ family budgets hard? John Hilsenrath of the WSJ traced the roots of rising prices to finding out why some sectors are higher than others. Photo Description: Laura Kummerman / WSJ
After the yield reached its highest level since November 2018, expectations of higher rates were displayed in the bond market. The yield on the benchmark 10-year U.S. Treasury note rose to 3.238%. 3Friday.156%. Bond yields rise as prices fall.
Cryptocurrencies fell further on Monday, with interest-rate fears a Weekend sales. According to CoinDesk, Bitcoin, the largest cryptocurrency, traded at about $ 23,900, down nearly 13% from the previous 24 hours. Ethereum was down 15.9% at $ 1,228 24 hours ago.
Overseas stock markets were shaken by fears of a tight US policy and a possible recession in the world’s largest economy. The Pan-Continental Stoxx Europe 600 fell 2.1%, while the UK FTSE 100 Index fell 1.9%.
Delivery platforms suffered the biggest loss during the European trading session. London based
Germany fell 13%
Fell 5.6%.
“Their businesses are built on the basis of consumer sentiment and appetite,” said Ms Streeder of Hargreaves Lansdowne. “If people feel pinched, they will go to the grocery store instead of serving food.”
Hong Kong’s Hong Cheng, Japan’s Nikkei 225 and South Korea’s Kospi Composite all fell about 3% or more, while stock indices weakened in Asia. Over the mainland China, the blue-chip CSI 300 index lost about 1.2%.
In the currency markets, the dollar rose 0.6% to 104.73 against the ICE dollar against its peers.
The possibility of a wider interest rate difference between the US and Japan pushed the yen lower further on Monday. The Japanese currency fell for a new decade, weakening beyond $ 135 per dollar for its weakest trade since 1998.
A weaker yen generally boosts Japanese exporters’ profits, but shares of exporters, including electronics and machine makers, fell on Monday on concerns that the central bank’s rate hike could cool the global economy.
Shares in Tokyo fell 3.3%
Decreased by 4.9%.
“The concern is huge, expectations for benefits from weak yen have flown away,” said Masahiro Ichikawa, a strategist at Sumitomo Mitsui DS Asset Management.
Japan’s Nikkei 225, South Korea’s Kospi Composite and Hong Kong’s Hong Cheng all fell 2.9% or more, while Asian stock indices weakened on Monday.
Photo:
Eugene Hoshiko / Associated Press
For now, the
Adding downward pressure on the yen, it seeks to keep interest rates low. The Central Bank of Japan on Monday bought the largest daily fixed-rate of Japanese government bonds, holding the 10-year yield from July 2018 at or below the bank’s 0.25% ceiling.
–Quentin Webb and Megumi Fujikawa contributed to this article.
Write to Chelsea Tulani at chelsey.dulaney@wsj.com and Dave Sebastian at dave.sebastian@wsj.com
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