Market Outlook Amid Global Growth Concerns

Global growth concerns affect markets

The dominant theme for the markets remains the global preoccupation with growth.

With bond yields rising in nearly all Western economies, central banks need to take action, leading traders to choose to avoid risky assets.

Volatility just saw the biggest spike since May 18, with tech stocks leading the losses in the United States. Novavax plunged 16% on a report of possible further delays in the authorization of its Covid-19 vaccine, while shares of Moderna also fell sharply. Amazon, Netflix, Coinbase and NIO were among the worst performers. All of these stocks are all in session on the IG platform and can be traded from 9am.

Nikkei follows the poor lead of the United States

In Japan, the Nikkei followed this poor US lead, falling to a one-week low. Mainland China and Hong Kong outperformed the region, with China’s consumer price index (CPI) rising 2.1% in May from a year ago, just below expectations for a 2.2% increase.

Ex-factory prices were in line with expectations at 6.4% year-on-year (YoY), cooling to a 14-month low. Hit by Covid-19 restrictions, the world’s second-largest economy has slowed dramatically in recent months, along with demand for steel, aluminum and other key industrial products.

Australia’s ASX 200 fell slightly on the news, completing a week of daily losses and posting its worst weekly performance since January.

European perspectives

In Europe, the indices follow.

The FTSE 100 and DAX are on track to record their worst weeks since the start of the war in Ukraine.

The main macroeconomic event of the day will be the publication at 1:30 p.m. of the consumer price index in the United States. Economists forecast an increase of 8.3% in May over one year, at the same rate as in April.

The rise in the core CPI should slow to 5.9%, after 6.2% recorded in April, which would be a second consecutive month of decline for this indicator. The Euro is relatively stable this morning after losing ground yesterday.

While believing that inflationary pressures have increased, the European Central Bank (ECB) failed to surprise markets, saying a target of 25 basis points (bps) was set for July and confirming the end of the program net purchase of assets on July 1.

Energy price rally

Rising energy prices are pausing, after new lockdown restrictions were imposed in parts of Shanghai yesterday.

US crude oil is back below $120 after hitting a new 13-week high earlier this week. Investors await the Baker Hughes oil rig count released at 6 p.m. Oil and gas drilling operations have not increased in the previous two weeks.

Teresa H. Sadler