Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Stocks and oil dive as investors hunt safe havens

Published 05/08/2022, 07:37 PM
Updated 05/09/2022, 06:41 PM
© 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,

© 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,

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.

© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 5, 2022.  REUTERS/Brendan McDermid

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.

Latest comments

Thanks!
Traders are crashing markets on purpose. Why? They Knowles but think the worst.
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
Hi mum
Boy day traders getting hammered....how you gonna buy yoir sub sandwich now in NY?
day traders are crushing it. short short short. easy money
hello
brief, transitory inflation exaggerated. a fake show in China?
9% inflation is not transitory
And Fed meetings are live streamed. They are not a court.
Where to find em?
The Fed Speakers:1. Either do not speak except at Fed events or in fron of Congress.OR:2. They speak 1 or 2 hours after markets close.OR3. All speak the same day, with the markets closed OR4. All Fed members resign, and all new members who own no stocks, will own any stocks above a set level, and cannot be on any BOD or member of Congress for 2 years after they get off.
Fed speaking is designed to either drop or raise the market...blatant manipulation which should be illegal.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.