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Stocks and oil dive as investors hunt safe havens

Economy May 09, 2022 06:41PM ET
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2/2 © Reuters. FILE PHOTO: A man wearing a protective mask, amid the coronavirus disease (COVID-19) outbreak, walks past an electronic board displaying Shanghai Composite index, Nikkei index and Dow Jones Industrial Average outside a brokerage in Tokyo, Japan, March 7, 2/2

By Sinéad Carew

NEW YORK (Reuters) - Stock indexes around the world fell sharply, oil prices sank about 6% and the dollar finished just off a 20-year high as investors fled risk and sought safe havens due to worries about inflation and slower global economic growth.

Oil prices tumbled as coronavirus lockdowns in China, the top oil importer, fed worries about energy demand. Gold fell and bitcoin plunged to its lowest level since July 2021.

U.S. Treasury yields eased after the benchmark 10-year note hit 3-1/2 year highs as traders braced for consumer price data and the auction of $103 billion in U.S. government debt this week.

U.S. stocks extended Friday's bruising sell-off as investors rushed to protect themselves against the prospect of a weakening economy.

"With slowing growth, regardless of a recession or not, you're going to see multiple compression for anything that's growth related. It's not necessarily an indictment of their fundamentals. It's an indictment of their multiples," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

"Investors are far more concerned with capital preservation at this point, and you're more concerned with raising cash in the event the macro environment worsens."

Central banks in the United States, Britain and Australia raised interest rates last week, and investors girded for more tightening as policymakers fight soaring inflation.

“Markets are continuing to re-price inflation risks as it becomes more evident that inflation is likely to be with us for longer than some people had hoped," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina, also citing increasing recession risks.

He said tighter policy would add to economic "slowdown pressures that are already building due to the lockdowns in China and the war in Europe.”

The Dow Jones Industrial Average fell 653.67 points, or 1.99%, to 32,245.7, the S&P 500 lost 132.1 points, or 3.20%, to 3,991.24 and the Nasdaq Composite dropped 521.41 points, or 4.29%, to 11,623.25.

It was the first time since March 31, 2021 that the S&P closed below 4,000. Nasdaq's trough for the session was its lowest since November 2020 in a sell-off led by mega-cap growth stocks.

Both the S&P and Nasdaq on Friday posted their fifth straight week of declines - their longest losing streaks in roughly a decade.

MSCI's gauge of stocks across the globe shed 3.09% on Monday after hitting its lowest level since December 2020, while emerging market stocks lost 1.63%.

Graphic: World equities - https://fingfx.thomsonreuters.com/gfx/mkt/znvnemgrrpl/world%20equities.JPG

GLOBAL CONCERNS

Investors focused China's zero-COVID policy. Shanghai tightened its lockdown for 25 million residents, feeding concerns about supply chain problems for global technology companies that manufacture in China.

Russian President Vladimir Putin exhorted Russians to battle but was silent about plans for escalation of the war in Ukraine. Kyiv described a stepped-up Russian offensive in the east and a push to defeat Ukrainian troops in a steelworks in Mariupol.

Worried investors sought safety, pushing the dollar index to a 20-year high in part due to concerns about the Federal Reserve's ability to combat inflation without hurting the economy. The greenback has risen for five straight weeks along with U.S. Treasury yields. The dollar then pared gains, down 0.077%, with the euro up 0.07% to $1.0558.

The Japanese yen strengthened 0.25% versus the greenback at 130.24 per dollar,

Greenback strength pressured Latin American stocks and currencies. The Mexican peso lost 1.04% versus the dollar at 20.37.

Benchmark 10-year notes last rose 22/32 in price to yield 3.0397%, down from 3.124% late on Friday.

U.S. crude recently fell 6.45% to $102.69 per barrel and Brent was at $105.43, down 6.19% on the day.

Spot gold dropped 1.6% to $1,852.58 an ounce. U.S. gold futures fell 0.94% to $1,857.10 an ounce.

In crypto currencies, bitcoin fell along with Wall Street.

Stocks and oil dive as investors hunt safe havens
 

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Comments (12)
Sarit Binis
Sarit Binis May 10, 2022 3:42AM ET
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Thanks!
Chad Richer Than You
Chad Richer Than You May 09, 2022 9:18PM ET
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Buy $TASI, stop wasting time and brain power on Wall st.
Jose Maria Orti Bueno
Jose Maria Orti Bueno May 09, 2022 3:46PM ET
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Traders are crashing markets on purpose. Why? They Knowles but think the worst.
Kurz M Ndandu
Kurz M Ndandu May 09, 2022 3:46PM ET
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it not the traders, this is exactly what the feds want. short term pain to cool prices down but I don't think it will. what the world needs right now cheap oil
William Smith
William Smith May 09, 2022 1:37PM ET
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Amazing that one of Biden's first moves after taking office was to give in to the green movements pressure  and Democrat leftists and ban the Keystone pipeline and cancelling American drilling leases, making the US once again prisoners to OPEC, Russia and the middle east for oil.  Those moves also put pricing back in OPEC'S  hands.  At the same time kicking Canada in the groin by telling them we dont want their oil.  Those actions are largely responsible for the current price of oil irregardless of tje Russian/Ukraine war.  The press uses the war in their disinformation campaign but prices were heading up long before it started because of Biden's executive orders.  That move was a sad  day for America and the free world.
mark johnson
mark johnson May 09, 2022 1:37PM ET
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That’s more of Russian collusion than anything Trump Ever did. Funny that Biden does it all on accident though.
Kurz M Ndandu
Kurz M Ndandu May 09, 2022 1:37PM ET
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absolutely 💯. the crazy thing is that it's easy for the president to reverse the policies since it was all done by executive orders. but it would mean accepting the mistake.
Eugene Debs
Eugene Debs May 09, 2022 1:37PM ET
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First, there has not been a shutdown of oil production. The U.S. was producing 11.185 million barrels of crude oil per day in 2021, compared with an average of 11.283 million barrels per day in 2020, according to data from the U.S. Energy Information Administration. The latest data shows that for the week of March 4, 2022, the U.S. is producing 11.6 million barrels per day. The U.S. remains the world’s biggest producer of crude oil, said Mark Finley, a fellow in energy and global oil at Rice University in Houston. One of the main reasons gasoline prices have pushed higher is because the price of crude oil has been rising over the past year. As more people get on the road after being cooped up during the pandemic, oil and gas suppliers that had scaled back production during the pandemic are struggling to keep up. Decisions by the OPEC+ oil cartel, led by Saudi Arabia and Russia, to only modestly increase the oil they released to the market kept prices high.
Chad Richer Than You
Chad Richer Than You May 09, 2022 10:06AM ET
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$TASI
Chad Richer Than You
Chad Richer Than You May 09, 2022 10:02AM ET
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Je Ezy
Je Ezy May 09, 2022 7:39AM ET
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Hi mum
Marco cuevas
Marco cuevas May 09, 2022 5:24AM ET
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Boy day traders getting hammered....how you gonna buy yoir sub sandwich now in NY?
Keith Spiller
Keith Spiller May 09, 2022 5:24AM ET
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day traders are crushing it. short short short. easy money
jobbar jilani
jobbar jilani May 09, 2022 12:05AM ET
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hello
Kerry Ditto
Kerry Ditto May 09, 2022 12:00AM ET
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brief, transitory inflation exaggerated. a fake show in China?
Keith Spiller
Keith Spiller May 09, 2022 12:00AM ET
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9% inflation is not transitory
 
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