The possibility of a global recession made traders nervous again on Tuesday after weak data from the US housing market, which ruined the mood that was beginning to recover in European and Asian stocks.
The reports that further stimulus from China and a welcome rise in consumer confidence in Germany initially lifted Europe’s STOXX 600, which added 0.8%.
US stock indices rise, after opening lower, awaiting the minutes of the May meeting of the Federal Reservewhich are likely to offer clues about the path of future interest rate hikes amid concerns about slowing economic growth.
The Dow Jones Industrial Average was up 0.4%; the S&P 500 index rose 0.7%; and the Nasdaq Composite climbed 1%.
In the commodity market, Crude oil rebounded, which along with higher food prices means more fuel for runaway inflation, which the world’s central banks are struggling to contain.
The US Federal Reserve has promised to act aggressively by raising the cost of borrowing and traders will be scrutinizing the minutes of its most recent meeting, due out this afternoon, for clues about the speed and extent of interest rate hikes.
Investors are currently expecting a series of 50 basis point rate hikes over the next two months, raising fears that such an aggressive strategy could cripple the world’s largest economy.
“From our perspective, recession fears are real,” said Salman Baig, portfolio manager at Unigestion, adding that “the Fed has a very difficult job on its hands” to engineer a “soft landing.”
The dollar index, which measures the US currency against six currency pairs, has fallen about 3% since hitting two-decade highs earlier this month. but on Wednesday it rebounded 0.5% to a level not seen since April 26.
Bond markets, meanwhile, were largely on hold ahead of the Fed minutes, although 10-year US debt reacted slightly lower to durable goods orders and capital goods orders data. that were published earlier.
European debt markets were attentive to the Fed, after the director of the European Central Bank, Christine Lagarde, gave her strongest signal to date that the agency will soon apply the first rises in the rate of bank deposits in more of a decade.
MSCI’s broader index of Asia-Pacific shares was trading mostly flat. Australian and Korean stocks rose 0.4% and Taiwan and Hong Kong’s Hang Seng advanced 0.8% and 0.2%, respectively. Meanwhile, the Japanese Nikkei index fell 0.2%.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
