Stocks Fall, Growth Fears Offset Change of COVID Measures in China

By: MRT Desk

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Stocks Fall, Growth Fears Offset Change of COVID Measures in China

Global stock markets fell on Wednesday and bonds held firm after a chorus of Wall Street bankers warned of a likely recession in the future, tempering optimism about the shift from China’s harsh zero-COVID policy.

  • Senior executives of Goldman Sachs (NYSE:GS), J.P. Morgan and Bank of America (NYSE:BAC) were pessimistic in their comments on the economic outlook on Tuesday, which weighed on risk appetite around the world and triggered a fresh recession signal in bond markets.
  • “Yields have accentuated their downward trend, which is a certain novelty. In earlier phases of risk aversion, bonds tended to fall along with equities, precisely because the risk-off mood was driven by fears about inflation and monetary policy,” said Giuseppe Sersale, fund manager at Anthilia in Milan.

“Now, concern about economic growth seems to be outpacing inflation,” he added.

A deteriorating economic outlook on Wednesday prompted new safe-haven demand for the U.S. dollar and longer-term bonds extended gains while thepetroleumIt gave way after Tuesday’s sharp fall.

  • Weak start in European stock markets led to pan-European indexSTOXX 600to its fourth straight session of losses, down 0.1% at 0903 GMT. The broadest MSCI index of Asia-Pacific stocks outside Japan fell 1.5%.

MSCI’s index of world shares was down 0.3 percent. TheS&P 500 futuresThey rose 0.07% early in the morning in Europe after Tuesday’s losses.

China’s national health authority declared Wednesday that asymptomatic cases of COVID-19 and those with mild symptoms can self-treat while quarantined at home.

The reaction of the markets, however, was negative, as the focus is on how China can execute its policy change, especially if new cases increase during the winter. Analysts say the road to fully reopening the economy will be long and not without risk.

The Shanghai Composite Index fell 0.4%, theHang SengHong Kong sank 3.2 percent and the yuan was down 0.2 percent at 6.9808 per dollar, giving up early gains.

To further worsen the outlook for global demand, China earlier in the day presented disappointing trade data for November, with both imports and exports suffering their biggest monthly declines since 2020, boding poorly for the recovery outlook.

  • As for commodities, futures of theBrent crudeThey fell 0.6% to $78.86 a barrel, after falling below $80 a barrel in the previous session for the second time in 2022.

The euro was flat at $1.0476 in Europe on Wednesday, with the pound trading little changed at $1.215, after falling 0.4% in the Asian session. TheDollar IndexIt rose 0.1% to 105.6, beating the low of 104.1 it touched on Monday and not seen since June 2022.

*ThegoldIn cash it traded at $ 1,772 an ounce and theBitcoinIt fell 1.6% below the $17,000 mark, amid weak confidence in cryptocurrencies, as the fallout from the FTX collapse ripples across the sector.

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