ALBAWABA – Stocks fell in Asia, the United States (US) and Europe, on Monday, as the US dollar strengthened against weakening risk appetites, caused by deflation risks in China and a possible recession in the US, Bloomberg reported.
European stock futures dropped, and US stocks extended losses after most American equities dropped Friday on the release of wage data showing inflation was still a threat.
The S&P 500 fell 1.2 percent over the holiday-shortened week, while the Nasdaq 100 dropped 0.9 percent. Whereas the Asian broader MSCI index slipped 1 percent, as reported by Reuters.
Shares in Hong Kong and mainland China lost gains after Chinese data showed further declines in factory-gate prices while core inflation slowed. The offshore yuan also slipped into loss after the release of the data, according to Bloomberg.
Meanwhile, the US dollar strengthened against all its Group-of-10 peers.
The yen weakened 0.4 percent, while Japanese stocks were among the worst performers in the region.
Treasury yields were little changed, with the two-year bond remaining below 5 percent, and the 10-year just above 4 percent.
Contrary to the general trend, the Hang Seng Tech Index rose 3.2 percent, before trimming its gains.
“It is clear that China is facing excess supply now,” Zhaopeng Xing, senior China strategist at Australia & New Zealand Banking Group Ltd. told Bloomberg.
“Demand side policies will be in need,” with the focus now shifting to expectations of fiscal stimulus before China’s July Politburo meeting, he said.
“Everyone is looking at inflation or has been looking at inflation for a long time,” Nicolo Bocchin, global head of fixed income at Azimut Group, said on Bloomberg Television. “Now it’s time to look at growth.”
Treasury yields may reach around 4.5 percent on the long end of the curve in the next few quarters and it may move “a little lower on the short end of the curve, just because of a reassessment of growth probabilities,” Bocchin said.
Markets summary by Bloomberg
Stocks
S&P 500 futures fell 0.2 percent as of 6:34 a.m. London time. The S&P 500 fell 0.3 percent on Friday
Nasdaq 100 futures fell 0.3 percent. The Nasdaq 100 fell 0.4 percent
Japan’s Topix index fell 0.2 percent
Hong Kong’s Hang Seng Index rose 0.5 percent
China’s Shanghai Composite Index was little changed
Australia’s S&P/ASX 200 Index fell 0.3 percent
Euro Stoxx 50 futures fell 0.3 percent
Currencies
The Bloomberg Dollar Spot Index rose 0.2 percent
The euro fell 0.1 percent to $1.0953
The Japanese yen fell 0.5 percent to 142.93 per dollar
The offshore yuan fell 0.1 percent to 7.2430 per dollar
The Australian dollar fell 0.4 percent to $0.6663
The British pound fell 0.2 percent to $1.2808
Cryptocurrencies
Bitcoin fell 0.2 percent to $30,132.44
Ether fell 0.5 percent to $1,860.38
Bonds
The yield on 10-year Treasuries advanced one basis point to 4.08 percent
Japan’s 10-year yield advanced 1.5 basis points to 0.460 percent
Australia’s 10-year yield advanced three basis points to 4.28 percent
Commodities
West Texas Intermediate crude fell 0.6 percent to $73.39 a barrel
Brent crude fell 0.7 percent to $77.92 a barrel
Spot gold fell 0.2 percent to $1,921.29 an ounce
