Investors are concerned about slowing growth, global stock markets are falling
Due to increased concerns about the global economic outlook, the stock market fell on Thursday, and government bonds fluctuated sharply in the previous days, suggesting that growth and inflation were lower than previously expected.
Asian stock markets fell first, then negative sentiment spread to Europe, and then to Wall Street-analysts blamed this move on expectations that the US economic growth will peak soon, while China is showing signs of slowing.
The US Standard & Poor’s 500 Index fell 0.8% in New York midday trading, while the technology-focused Nasdaq Composite Index fell 0.9%. Both indexes have set records in recent days.
In Europe, after the Hong Kong Hang Seng Index closed down 2.9%, the Stoxx Europe 600 Index for the entire continent fell 2%. Spain’s Ibex stock index closed down 2.4%, and Italy’s FTSE MIB index fell 2.6%. The FTSE 100 Index fell 1.7%.
Shaniel Ramjee, senior investment manager at Pictet Asset Management, said: “We have seen changes in asset allocation, with people selling risky assets across the board and buying safer government bonds.”
On Thursday, the government bond market saw volatility again. The yield on the 10-year US Treasury note, which is inversely proportional to the price, fell to 1.276%, and fell by 0.02 percentage points to 1.29% during lunchtime in New York.
This decline has caused the global benchmark bond yield, which affects the borrowing costs of companies and households around the world, to fall to its lowest level since early February, and is expected to set its biggest weekly decline since June 2020.
This is in line with investors’ concerns about the overheating of the U.S. economy and Sell treasury bonds -Its fixed interest payment has been eroded by inflation-buying stocks of companies in economically sensitive industries such as banking and energy.
in Minutes of the most recent meeting of the Central Bank Federal Reserve officials announced on Wednesday that “the uncertainty surrounding the economic outlook has increased.” Wall Street economists predict that the annualized growth rate of US GDP in the second quarter of this year will exceed 9% and will slow down thereafter.
Also on Wednesday, the Chinese government said it would use “Just in time” layoffs The bank’s reserve requirement ratio is required to keep funds flowing in the economy. Daiwa economist Chris Scicluna said that investors view this as a sign that China’s second-quarter GDP data to be released next week “may be less than market expectations.”
Chinese ports and factory districts have been struggling to cope with the outbreak of the Coronavirus Delta variant, as are more and more countries in the world. Japan announced on Thursday Tokyo will enter a state of emergency throughout the Olympic Games to control the infection.
“The market tends to focus on only a few things at a time,” Ramji said. “The focus has shifted to the United States. The growth rate is slower than ever… Now people pay more attention to China.
The U.S. dollar index, which measures the U.S. dollar against other major currencies, fell 0.3% on Thursday. The oil benchmark Brent crude oil was flat at $73.46 per barrel.
European government bonds also rose. The yield on German 10-year bonds briefly fell 0.03 percentage points to minus 0.323%, the lowest level since March. It later closed at minus 0.31%.
Maarten Geerdink, head of European equities at NN Investment Partners, said that after the coronavirus shutdown last year, the market “expects us to see the highest growth figures.” He added that the “price trend” is being “self-sufficient” because traders will dump stocks to prevent further blows.