Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Global stocks rebound despite unease over economy; dollar gains

Economy May 20, 2022 05:36PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO - An investor stands in front of an electronic board showing stock information at a brokerage house in Shanghai, China, August 24, 2015. REUTERS/Aly Song 2/2

By Herbert Lash

NEW YORK (Reuters) - Global equity markets rebounded after the S&P 500 pared losses that briefly took it into bear market territory, and the dollar gained on Friday, as investor unease about Federal Reserve policy tightening to curb inflation kindled fears of a recession.

Shares rebounded earlier in Europe and Asia after China cut a key lending benchmark to bolster its weakening economy, helping initially to drive gains on Wall Street.

China cut its prime rate for five-year loans, which influences mortgage prices, by 15 basis points in a reduction that was sharper than expected as authorities seek to cushion the impact of an economic slowdown.

While a late-day rally stopped the S&P 500 from confirming a bear market, the gloom on Wall Street led the benchmark to fall for the seventh consecutive week, an event that has occurred only five times since 1928, according to S&P Dow Jones Indices.

How long the downdraft in equities lasts will depend on when inflation breaks, said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

"What really flummoxed investors this week, myself included, is when you have the types of companies that typically do well in economic softness, do terribly," Tuz said, referring to poor earnings results at Walmart (NYSE:WMT) Inc and Target Corp. (NYSE:TGT)

The S&P 500 closed up 0.01% after being down 2.27% at one point or below the level would confirm a bear market - a 20% decline from its Jan. 3 record closing high.

The Dow Jones Industrial Average rose 0.03% and the Nasdaq Composite, already in bear territory, fell 0.3%.

Equity valuations need to come down and the expected return on investments, the discount rate, needs to go up, said Stephen Auth, chief investment officer of equities at Federated Hermes (NYSE:FHI).

"The market is starting to digest the idea that this might be a new world where the discount rate on risk assets is not zero anymore," Auth said.

"You're seeing all these different areas of the market get pounded at the same time and it's just been very unsettling for investors," he added.

MSCI's gauge of stocks in 47 countries closed up 0.37%, but still fell for the seventh consecutive week, its longest losing streak since the index was launched in 1990.

Earlier in Europe, the pan-regional STOXX 600 index rose 0.73%.

U.S. Treasury yields fell for a third straight session on concerns about growth prospects. The yield on benchmark 10-year notes fell 6.5 basis points to 2.790%.

Fed funds futures were firmer, suggesting that the U.S. rates market has pulled back a bit from some of its more extreme rate hike estimates. The rates market has priced in a fed funds rate of 2.783% at the end of next year, compared with the current level of 0.83%. It was as high as 2.9% two weeks ago.

The day's gains for the dollar were not enough to erase sharp losses from earlier this week that pulled the greenback away from a five-year high against the common currency, on worries its months-long rally may have been overdone.

The dollar has been supported in recent months by a flight to safety amid a rout across markets due to fears of soaring inflation, a hawkish Fed and the war in Ukraine.

The dollar index rose 0.146%, with the euro down 0.3% at $1.0554. The Japanese yen weakened 0.09% to 127.92 per dollar.

Euro zone bond yields were higher after two days of hefty falls as risk sentiment improved following China's rate cut.

Germany's 10-year government bond yield rose 0.1 basis point to 0.9450%, below last week's eight-year high of 1.189%.

Markets are pricing in 38 basis points of tightening from the European Central Bank by its July meeting. This suggests a 25 basis-point hike is fully priced in and markets see around a 50/50 chance of an additional 25 basis-point move.

Oil prices steadied, on course for little change for the week as a planned European Union ban on Russian oil balanced concerns that slowing economic growth will hurt demand.

U.S. crude futures settled $1.02 higher at $113.23 and Brent rose 51 cents to settle at $112.55 a barrel.

Gold edged up, heading for its first week of gains in five weeks on persistent worries over economic growth and the dollar's decline over the week.

U.S. gold futures settled up 0.1% at $1,842.10.

Bitcoin fell 3.36% to $29,272.33.

Graphic: World stocks plunge $13 trillion in value - https://fingfx.thomsonreuters.com/gfx/mkt/zdpxownylvx/Pasted%20image%201653043233674.png

Global stocks rebound despite unease over economy; dollar gains
 

Related Articles

Dow Futures Trade Lower After Positive Week
Dow Futures Trade Lower After Positive Week By Investing.com - Jun 26, 2022 2

By Oliver Gray  Investing.com - U.S. stock futures were trading lower during Sunday's evening deals, easing from a major rebound last week as investors monitored growing recession...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (5)
Muhmmad Shahzad Shahzad
Muhmmad Shahzad Shahzad May 22, 2022 3:27AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
shahzad
William Smith
William Smith May 20, 2022 1:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Welcome to the Biden catastrophe.   His oil policies caused huge oil spikes.  His weakness gave Putin the confidence to invade and war to Europe. He has brought disastrous inflation upon America with his out of control spending programs and non existent energy policy. We will be lucky to survive 4 years of his gross incompetence.   C'mon man, I did this!!!!
Robert Cox
Robert Cox May 20, 2022 1:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Calm down, comrade! I hear Putin is looking for you. Something about awnding you to Siberia?
Vaibhav Pujara
Vaibhav Pujara May 20, 2022 1:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Calm down mr left aka mr cox , u need to set ur thoughts just a little right. I cant agree more with Mr Smith
Robert Cox
Robert Cox May 20, 2022 1:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
LOL! Have you ever had a thought of your own or do you simply parrot right wing bs?
amt hun
amt hun May 20, 2022 1:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Putin had been planning to invade Ukraine long before Biden was elected. Not all bad things in the world happen because of a few men.
Kaushal Shah
Kaushal Shah May 20, 2022 6:36AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
what about USA inflation? forgot? ohh so Dow is accepted that now China has become super power. bye bye biden last president of USA super power status.
Gary Moses
Gary Moses May 20, 2022 6:36AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Keep Dreaming.
Darrell Peterson
Darrell Peterson May 20, 2022 3:13AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Ghina info is dubious at best, disregard and move along.
Adamo Nals
Adamo Nals May 20, 2022 12:46AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
WTI oil will be going to $150-$200 a barrel. I hope someone sees this. Buy as much energy stocks as you can. This is the super cycle once in 100 years. Inflation will be with us for years. We might even have stagflation. Stocks in energy are so cheap. You’ll make a bundle. Energy was dead money for 15 years. Not anymore s&p $220 a share times 15 X equals 3300. And we will overshoot. That’s where we’re going. Sell sell every rally and buy oil on any pullbacks. With both hands you buy energy stocks!!! And have SPY puts. You must!!! Gd luck
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email