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Economic fears hit global equities, commods; Twitter lifts Wall St

Stock Markets Apr 25, 2022 05:50PM ET
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2/2 © Reuters. FIE PHOTO: A man wearing a protective mask is seen inside the Shanghai Stock Exchange building, at the Pudong financial district in Shanghai, China February 28, 2020. REUTERS/Aly Song 2/2

By Chris Prentice and Marc Jones

WASHINGTON/LONDON (Reuters) - European stocks slid to a one-month low and commodity prices dropped on Monday on renewed concerns about rising interest rates and China's sputtering economy, while Wall Street shares rose, reversing losses after Twitter agreed to be bought by billionaire Elon Musk.

Fears over China's COVID-19 outbreaks spooked investors already worried that higher U.S. interest rates could dent economic growth. U.S. shares were lower throughout most of the session, extending last week's sharp declines. The CBOE Volatility index known as Wall Street's fear gauge, hit the lowest level since mid-March.

Twitter Inc (NYSE:TWTR) shares rose on news that Elon Musk, the world's richest person, clinked a deal to pay $44 billion cash for the social media platform populated by millions of users and global leaders.

After news of the deal, Wall Street reversed course on a late rally by growth stocks, and the Nasdaq ended sharply higher.

The Dow Jones Industrial Average rose 0.7% to end at 34,049.46 points, while the S&P 500 gained 0.57% to 4,296.12.

The Nasdaq Composite climbed 1.29% to 13,004.85.

"You can tell growth wanted to rally all day but the market was holding it down. The Twitter news came and that was just a green light to start buying some of the growth names. They have been oversold for a while," said Dennis Dick, a trader at Bright Trading LLC.

Earlier, Europe's STOXX 600 index dropped 1.8% to close at its lowest since mid-March. Commodity stocks slumped 6%, as global worries overshadowed relief from French presidential results on Sunday which saw Emmanuel Macron edge past far-right challenger Marine Le Pen. (EU)

MSCI's benchmark for global equity markets fell 0.41% to 668.85. Emerging markets stocks fell 2.61%. Overnight, Asian markets had their worst daily decline in over a month on fears Beijing would go back into a COVID-19 lockdown.

"Stocks' rebound from the first quarter correction has hit a wall of rising long-term interest rates," Morgan Stanley (NYSE:MS)'s Chief Investment Officer Lisa Shale said in a note.

"With the Fed talking about a faster and larger balance sheet reduction than anticipated, real yields are approaching zero from their deeply negative territory. With the nominal 10-year U.S. Treasury cracking 2.9%, the equity risk premium

has plummeted."

The euro slid 0.9%, near the session's trough and its weakest level since the initial COVED panic of March 2020.

"The reality is there is more to the French election story than Macron's win yesterday," said Rabobank FX strategist Jane Foley.

France will hold parliamentary elections in June, and Macron also seems likely to maintain pressure for a Europe-wide ban on Russian oil and gas imports, which would cause near-term economic pain.

"We had German officials saying last week that if there was an immediate embargo of Russian energy then it would cause a recession in Germany. ... that would drag the rest of Europe down and have knock-on effects for the rest of the world," Foley said.

Graphic:FRANCE-ELECTION French presidential elections- https://graphics.reuters.com/FRANCE-ELECTION/zgpomlkkqpd/graphic.jpg

State television in China had reported that residents were ordered not to leave Beijing's Chatoyant district after a few dozen COVID cases were detected over the weekend.

China's yuan skidded to a one-year low while China stocks saw their biggest slump since the pandemic-led panic-selling of February 2020. (SSE)

The dollar index rose 0.65% and climbed to a two-year high. It touched a peak of $1.0695 against the euro. [FRX/]

Investors wonder how fast and far the Federal Reserve will raise U.S. interest rates this year and whether that and other global strains will tip the world economy into recession.

This week will be packed with corporate earnings. Almost 180 S&P 500 index firms are to report. Among big U.S. tech companies, Microsoft (NASDAQ:MSFT) and Google (NASDAQ:GOOGL) report on Tuesday, Facebook (NASDAQ:FB) on Wednesday and Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) on Thursday. [.N]

In Europe, 134 of the Stoxx 600 will put out results, including banks HSBC, UBS and Santander (BME:SAN) on Tuesday, Credit Suisse (SIX:CSGN) on Wednesday, Barclays (LON:BARC) on Thursday and NatWest and Spain's BBVA (BME:BBVA) on Friday. (EU)

"I wonder whether just meeting expectations will be enough, it just feels like maybe we'll need a bit more," said Rob Carnell, ING's chief economist in Asia, referring to jitters about big tech following a dire report from Netflix (NASDAQ:NFLX) last week.

Graphic: World stocks suffering one of worst ever starts to a yea- https://fingfx.thomsonreuters.com/gfx/mkt/znvnemkzapl/Pasted%20image%201650875843804.png

FEAR FACTOR

Hong Kong's Hang Seng fell 3.7% and the Shanghai composite index slid over 5% [.SS].

China's central bank had fixed the mid-point of the yuan's trading band at its lowest level in eight months, seen as an official nod for the currency's slide, and the yuan was sold further, to a one-year low of 6.5092 per dollar.

The higher dollar pushed spot gold 1.7% lower by 4:53 p.m. EST (2053 GMT). U.S. gold futures settled nearly 2% lower at $1,896. Palladium prices were down nearly 10% on worries over Chinese demand.

In oil, Brent crude closed 4% lower at $102.32 a barrel and U.S. crude settled down 3.5% at $98.54, its first close below $100 since April 11. [O/R]

Euro zone bond yields fell.[GVD/EUR][US/]

Money markets are pricing in a 1 percentage point increase in U.S. interest rates at the Fed's next two meetings and at least 2.5 points for the year, which would be one of the biggest annual increases ever.

This week will also see the release of U.S. growth data, European inflation figures and a Bank of Japan policy meeting, which will be watched for any hints of a response to a sharp fall in the yen, which has lost 10% in about two months.

Graphic: The only way is up!- https://fingfx.thomsonreuters.com/gfx/mkt/zdpxognxgvx/Pasted%20image%201650884305765.png

Economic fears hit global equities, commods; Twitter lifts Wall St
 

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Comments (10)
Adam Paine
Adam Paine Apr 26, 2022 1:24AM ET
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Jesus, what if the markets crashed. would the world come to an end!!
Jerome Sheehan
JayShee Apr 25, 2022 10:42AM ET
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Reuters - try to keep your political opinions to yourself when reporting on the markets. Macron's victory has ZERO to do with what's going on in the markets. FACTS MATTER as you often say.
Aa Aj
Aa Aj Apr 25, 2022 10:15AM ET
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Joke of the day
John Laurens
John Laurens Apr 25, 2022 9:56AM ET
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WRONG! Stocks are down because Macron the fascist won. Reuters spin is getting SO OLD!!!
Matt Kay
Matt Kay Apr 25, 2022 9:56AM ET
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wasnt other option putins puppet who was going to give europe to russia?
John Laurens
John Laurens Apr 25, 2022 9:56AM ET
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Matt Kay  you're clearly confused. It's the conservatives who are against buying anything from Russia, and the libs who can't stop feeding them euros. Remember, Trump openly warned EU to STOP buying Russian gas. REMEMBER?
John Martin
John Martin Apr 25, 2022 3:30AM ET
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So now you deleted my comments? Rather than spammer in this forum. Lol hilarious.
Russ DePuy
Russ DePuy Apr 25, 2022 3:00AM ET
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Our corrupt government needs to realize that they work for us. They need to stop throwing our money away. Trump tried to drain the swamp, but the swamp is much larger than he dreamed. we need a government overhaul!!!
Maximus Maximus
Maximus Maximus Apr 25, 2022 3:00AM ET
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trump represents only himself, you are beyond naive to think anything else
Ken Roth
Ken Roth Apr 25, 2022 3:00AM ET
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Ukraine is gratefull for the help that US and western allies are providing to help fight the dictator Putin, you should know that if western world incl. US did nothing we would all be talking russian or chinese
James Johannsen
James Johannsen Apr 25, 2022 3:00AM ET
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yes overhaul, but trump "the father of the vaccine " printed more debt to future generations then any president puppet before him
Raja Tampan
Raja Tampan Apr 25, 2022 2:22AM ET
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Why do you have to depend on US rate?
Тони Chuk
Тони Chuk Apr 25, 2022 2:22AM ET
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because they are the biggest gipsy's ever lived my friend.
Mart Bab
Rubberduck1973 Apr 25, 2022 2:18AM ET
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Just when inflation is getting sticky, with the cost of labor rising rapidly, gold is sold off along with stock, because the fed said 50 basic points rate hike. Ok. 8,5 % inflation, climbing and sticky versus 0,50 procent rate hike? I am buying gold with my eyes closed.
Mart Bab
Rubberduck1973 Apr 25, 2022 2:18AM ET
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See you at the short squeeze in gold
Mart Bab
Rubberduck1973 Apr 25, 2022 2:18AM ET
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Also selling stock with my eyes closed. This is just the beginning of the great decline in stock.
Murali Krishna
Murali Krishna Apr 25, 2022 2:15AM ET
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Because nobody will believe me if I say, based on my analysis, I will say, based on my Elliot Wave Principle analysis, SP 500 will go somewhere today. Remember analysis is my own cockamamie analysis, but I say based on Elliot Wave Principle analysis or Fibonacci or someone else analysis, Someone may believe me.
Meru Pet
Meru Pet Apr 25, 2022 12:22AM ET
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dxy: so so, 10y down hmm....
 
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