London, Monday, 9 May 2022
US Markets Summary
Investors awaited additional data this week on inflation and earnings to judge the strength of the economy and business profits as the Federal Reserve continues to tighten monetary policy, sending US stocks lower on Monday.
The S&P 500 index fell more than 3%, ending below 4,000 for the first time since March 2021.
As technology equities came under further pressure, the Nasdaq Composite fell 4.3 percent. The Dow Jones Industrial Average fell almost 650 points, or 2%, to 32,245.70.
In recent weeks, a combination of geopolitical, COVID-19, and inflationary fears have impacted hard on risk assets, causing volatility in equities, cryptocurrencies, and commodities.
The CBOE Volatility Index, or VIX, has risen beyond 34, much above its long-term average of roughly 20.
Investors are waiting for fresh statistics on the condition of inflation in the United States this week, which will reveal how aggressive the Fed needs to be to reign in rising pricing pressures.
The Consumer Price Index (CPI) and Producer Price Index (PPI) for April are likely to reflect a decrease in price increases, implying that the rate of price increases across the economy peaked in March.
This data will be released shortly after the Federal Reserve's recent monetary policy announcement and press conference, which was met with increased volatility in risk markets.
Following the monetary policy announcement, stocks jumped and then fell, and Treasury yields marched higher, as investors assessed whether the central bank's instruments would be sufficient to avoid inflation from getting entrenched while maintaining economic growth.
· S&P 500 (^GSPC): -132.10 (-3.20%) to 3,991.24
· Dow (^DJI): -653.67 (-1.99%) to 32,245.70
· Nasdaq (^IXIC): -521.41 (-4.29%) to 11,623.25
· Crude (CL=F): -$7.40 (-6.74%) to $102.37 a barrel
· Gold (GC=F): -$29.90 (-1.59%) to $1,852.90 per ounce
· 10-year Treasury (^TNX): -4.4 bps to yield 3.0790%
Source: Yahoo Finance
European Markets Summary
European stock markets closed Monday in the red, owing to ongoing concerns about global inflation.
While the Russia-Ukraine conflict remains unknown, China's "zero tolerance" COVID-19 policy and tightening of measures in the country's financial centre, Shanghai, have generated concerns that global inflationary pressures may intensify.
According to a survey released on Monday by research firm Sentix, the eurozone investor confidence index continued to decline in May, plummeting to its lowest level in 23 months.
From minus 18.0 in April, the index, which evaluates the eurozone's six-month economic outlook based on a survey of 2,800 investors and analysts, fell to negative 22.6 in May, the lowest level since June 2020.
The Stoxx Europe 600 benchmark index fell 2.90 percent to 417.46 points as a result of these occurrences.
The FTSE 100 index in the United Kingdom sank 2.32 percent to 7,216 points, while the CAC 40 index in France fell 2.75 percent to 6,086.02 points.
The FTSE MIB 30 index in Italy fell 2.75 percent to 22,832.56 points at the close.
The European stock market's decline coincided with European Commission President Ursula von der Leyen's Friday remarks that Europe should reduce its reliance on Russian gas.
"Russia is no longer a trustworthy partner," she said at a virtual conference held by the Frankfurter Allgemeine Zeitung in Germany.
(Written and edited by: The Decision Maker)