HONG KONG, July 12 (Reuters) – Global stock markets faltered on Tuesday, with oil falling and the euro in line with the safe-haven dollar on Tuesday as the prospect of further tightening by central banks, renewed Covid outbreaks in China and energy shortages in Europe spooked investors. .
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) Japan’s Nikkei fell 1.3% to a two-year low (.N225) 2% lost.
Futures pointed to an open week in the US and Europe as US S&P 500 e-minis lost 0.6%, Nasdaq futures fell 0.7%, pan-region Euro Stoxx 50 futures fell 0.8% and FTSE futures fell 0.44%.
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The euro fell to $1.0005 against the US dollar, moving closer to parity for the first time since December 2002, as investors worry the energy crisis could push the region into recession.
“Risk sentiment dominates global markets,” said Yuding Shao, macro strategist at State Street Global Markets.
“The dollar is the international reserve currency. So when there’s a recession or there’s volatility, the greenback is the currency people rush to because it’s safe,” Zhao added.
The dollar index, which tracks the currency against six peers, rose to 108.44, its highest since October 2002.
The focus for the week will be macro data, including US consumer inflation, and comments from Federal Reserve officials, as investors look for clues about the outcome of the Fed’s upcoming policy meeting before entering the period before officials meet.
A higher inflation reading will add pressure on the central bank to increase the already aggressive pace of interest rate hikes.
High on the list of investors’ worries is the adoption of new COVID-19 restrictions starting this week to contain new infections after emerging Chinese cities, including commercial hub Shanghai, detected the highly contagious omicron sub-variant. read more
In the afternoon, Hong Kong’s benchmark Hang Seng Index (.HSI) It fell 1.21% to its lowest since June 17, while China’s blue chip CSI300 (.CSI300) 1.3% lost.
Additionally, rising energy prices in Europe are a major concern as the largest single pipeline carrying Russian natural gas to Germany enters annual maintenance.
Investors worry the shutdown could be extended as the war in Ukraine further restricts European gas supplies and pushes the struggling eurozone economy into recession. read more
The yield on the 10-year Treasury note was at 2.9595%, falling below 3% overnight as investors bought safe-haven Treasuries amid a sell-off on Wall Street.
Despite concerns about tight supplies, growth fears also weighed on oil.
Brent crude fell $1.35, or 1.3%, to $105.75 a barrel, while US West Texas Intermediate crude was at $102.64 a barrel, down $1.45, or 1.4%.
Gold fell slightly. Spot gold traded at $1728.98 per ounce.
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