Stock prices fall after retail giants sound stagflation alerts

ryanniesMay 19, 2022

London — Thursday’s global stock market is even bigger after some of the world’s largest retailers have given Wall Street the worst day in almost two years with harsh warnings about how high inflation is. I was hit by a decline.

Bond markets plunged for security and rebounded on bets that rising interest rates could be readjusted, but stocks after US retail giant Target’s stocks were wiped out at $ 25 billion on Wednesday. Plunged.

Wall Street, which caused a total $ 1.5 trillion bleeding, fell another 1%, Europe fell 2% as retailers fell 2.5%, and Chinese tech companies also fell overnight. Low price.

“It really, really surprised people that Target and Wal-Mart came out with disappointing numbers,” said Robert Ulster, Chief Investment Officer of Close Brothers Asset Management.

“Now, the US is being downgraded to GDP (forecast) one after another … It looks like we are facing a faster slowdown than expected.”

Its MSCI World Index is now the worst start of the year in recent records, down almost 18%.

Signs of economic turmoil are highlighted as weekly U.S. unemployment claims increase slightly and a survey of companies in the Central Atlantic coast shows confidence about a few months ahead at the lowest in 13 years. rice field.

Goldman Sachs currently estimates a 35% chance of a US recession over the next two years, while Morgan Stanley predicts a 25% chance of a recession over the next 12 months.

Megacap giants Amazon, Nvidia and Tesla all fell nearly 7% and Apple fell 5.6%, leaving Wednesday’s rout 4% off the S & P 500 and 5% off Nasdaq before the new Wall Street. There was a good sale.

Stock prices in the Asia-Pacific region, excluding Japan, fell 1.8% in four days, Australia’s high resource index fell 1.65%, and Hong Kong fell 2.5%. The Nikkei Stock Average in Tokyo also fell 1.9%.

Hong Kong-listed tech giants were hit particularly hard, with the index dropping nearly 4%. China’s online giant Tencent sank more than 6% after reporting no revenue growth in the first quarter. This is the worst performance since it was released in 2004.

China’s technology and real estate sector remains upset from a year-long government crackdown and slowing economic outlook due to Beijing’s strict Zero Corona policy, despite calm comments from Deputy Prime Minister Liu He to technical executives on Wednesday. are doing.

Central focus

The focus was on what the central bank is doing now as it walks the tightrope to regain its current high level of inflation control in 40 years without causing a painful recession. rice field.

When arriving at a two-day meeting of top central banks near Bonn, German Treasury Minister Christian Lindner “discusses what can be done together in their respective areas of responsibility to avoid stagflation scenarios. I need to. “

The US’s top two central bankers said Wednesday that the Federal Reserve expects to shift down to a more measured pace of rate hikes after July, but in Europe traders suddenly have four ECBs. We set the price of the increase. It hasn’t raised interest rates for over a decade.

But while things haven’t come back, they seem to be heading in the “out of control” direction. That’s probably the most worrying part of the market, “said Hebe Chen, market analyst at IG.

In the currency market, the US dollar rose 0.55% overnight and fell 0.3% against a basket of major currencies after three consecutive days of losing streak.

The euro rose almost 1% in view of the ECB rate rise, while the Australian dollar rose 1.6% and the Kiwi in New Zealand rose 1.2%. This is underpinned by the relaxation of Shanghai’s COVID blockade in China.

US Treasuries continued to fall to 2.77% in yield (inversely proportional to price), but the risk-averse mood in Europe kept Germany’s 10-year bond yield well below the carefully monitored 1% level.

Inflation worries say oil prices will fall again as concerns over slowing economic growth and signs that Venezuelan oil may return to the market outweighed protracted concerns over tight global supply. I was looking.

Brent crude rose from $ 110.41 per barrel to $ 108.04 in London trading, while US crude fell to $ 108.05 per barrel, down more than 12% since March to $ 1,830 per ounce. It has risen.

(Additional reports by Francesco Kanepa in Königswinter, Germany, Stella Kiu in Beijing, Arun John in Hong Kong, edited by Chizu Nomiyama and Kirsten Donovan)