Global Markets Drop After Choppy Trading in U.S.

Global stock indices and futures fell on the major indexes, suggesting that US markets could come under fresh pressure on Tuesday after starting the week with a lively trading session.

Market volatility has rebounded in recent sessions, as investors become concerned about how quickly the Federal Reserve will act to combat inflation by raising interest rates and shrinking its balance sheet.

US markets fell on Monday, with the Nasdaq Composite Index dropping 4.9% before rising to close 0.6% higher. The S&P 500 and Dow Jones industrial indexes also made a similar comeback.

Tai Hui, chief market strategist for Asia at JPMorgan Asset Management, said the turbulent trading “has shown that investors face a dilemma.”

He said investors are concerned about US monetary policy and how it could affect higher-priced stocks, having moved quickly into prices in four or more interest rate hikes this year. On the other hand, Mr. Hui said economic growth forecasts for 2022 remain decent and investors realize that few assets offer the same long-term return prospects as stocks.

By mid-afternoon on Tuesday in Hong Kong, futures linked to the Dow, S&P 500 and Nasdaq-100 were down 0.8% to 1.3%, while regional stock indices were broadly lower.

Japan’s Nikkei 225 closed down 1.7%, with major stocks including technology and telecom giant SoftBank Group Corp. down..

which fell more than 5%. Australia’s S&P/ASX 200 and South Korea’s Kospi Composite are down more than 2%.

Hong Kong’s Hang Seng Index is down 1.6%, with banks HSBC Holdings PLC and Standard Chartered PLC down 2.4% and 2.9%, respectively. The CSI 300 index of major stocks listed in mainland China fell 1.3%.

Jason Liu, head of Deutsche Bank’s principal investment office in Asia, said US markets are likely to remain volatile at least until the first Fed rate hike, which is widely expected in March.‘s

Private International Bank.

His team cut their position on US stocks, reflecting both their own holdings and their investment recommendations to clients, to neutral from overweight last week, after maintaining a plus position for more than a year.

Federal Reserve policy makers meet on Tuesday and Wednesday this week and are set to resume discussions about how quickly they will shrink their portfolio of nearly $9 trillion in bonds.

“Everyone will be watching the Fed’s guidance this week,” said Mr. Liu.

The yield on the 10-year US Treasury rose 0.029 percentage points to 1.764%, according to Tradeweb. Bond yields move inversely with prices.

Bitcoin was quoted at $35,982, according to CoinDesk, or about 2.4% lower than late Monday afternoon in New York, when it was around $36,851.

Write to Rebecca Feng at [email protected] and Quentin Webb at [email protected]

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