NEW YORK (AP) – Shares are rising on early Wall Street trading on Tuesday, finding some stability one day after falling in a bear market. A report showed that wholesale inflation slowed unexpectedly last month, an unencouraging piece of news about inflation, which has been hitting markets in recent days. The S&P 500 was up 0.4% at first and Treasury yields slowed its monstrous movements. There was also some positive news from American companies. FedEx rose 9% after sharply raising its dividend, and enterprise software maker Oracle soared 10% after easily surpassing earnings estimates.
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TOKYO (AP) – Global stocks fell on Tuesday following the fall of Wall Street in a bear market as investors anxiously watched a new and uncertain world of higher interest rates, international conflicts and recession.
Shares traded lower in Europe, erasing short gains after markets opened, while Asian stocks fell but then regained some gains.
The STOXX Europe 600 index fell 0.5% after opening higher. The CAC 40 in France fell 1.33%, the DAX 0.55% and the FTSE 0.4%. In Asia, Shanghai advanced, while Hong Kong finished flat and Tokyo lowered.
Tuesday’s market action follows Monday’s headlines on Wall Street, where the benchmark S&P 500 lost 3.9%, 21.8% below its high. This meant a bear market, when an index has fallen 20% or more from a recent high over a sustained period of time.
At the heart of the sale is the US Federal Reserve’s effort to control inflation by raising interest rates. The Fed is struggling to control prices and its main method is to raise rates, but this is a powerful tool that could slow down the economy too much and cause a recession. The war in Ukraine is driving up oil and food prices, fueling inflation and lowering consumer spending, especially in Europe.
“The old pre-crown balance, with low inflation, very weak monetary policy and low geopolitical risk premiums, is no longer maintained,” said Andreas Koester, head of portfolio investment at Union Investment in Frankfurt. Germany.
“We are now in a transition to a new post-crown balance, of which only schemes are visible, such as higher inflation levels or a return to competition from major powers on the international stage,” Koester added.
Strong declines, however, can offer risk-averse investors a chance to get deals. US equities appeared to be heading for a modest rebound as markets opened, with the future of Dow industrials rising 0.05%. The future of the S&P 500 was 0.1% higher.
Some economists speculate that the Fed may raise its key rate by three-quarters of a percentage point when it meets Wednesday. That’s three times the usual amount and something the Fed hasn’t done since 1994.
“Global markets … have shown that they don’t like where the global economy is right now,” Robert Carnell, ING’s Asia-Pacific research chief, said in a report.
Other central banks around the world, including the Bank of England, have also raised rates, while the European Central Bank said it will do so next month and in September.
In addition to inflation concerns and what central banks are doing to moderate rising prices, restrictions to curb the spread of COVID-19 in China have also been weighing on market sentiment in Asia.
The shift from central banks, especially the Fed, to higher interest rates has reversed the dramatic rise in stock prices driven by massive market support following the impact of the pandemic in early 2020. Markets they are gearing up for bigger-than-usual hikes, as well as some daunting signals about the economy and business profits, including a record-breaking low reading on consumer sentiment hit by high gasoline prices.
Higher interest rate benchmarks increase the yields of less speculative investments, such as bonds, increasing their attractiveness relative to equities. And design moves will slow down the economy, making borrowing more expensive.
The risk is that central banks could cause a recession if rates rise too high or too quickly. Last month, the Fed noted additional rate hikes to double the usual amount that is likely in the coming months. Consumer prices in the US are at their highest level in four decades and rose 8.6% in May compared to a year ago.
One of the most reliable warning signs of an economic downturn has been sounding, as short-term U.S. Treasury bonds yielded briefly more than long-term ones. This may be a sign of pessimism about the long-term outlook and indicate that a recession may be on the way.
Another factor that influences inflation and investor sentiment is the price of oil. It remained at about $ 120 a barrel on Tuesday, up 60% so far this year.
The benchmark U.S. crude recovered from previous losses on Tuesday, gaining 54 cents to $ 121.47 a barrel in electronic trading on the New York Stock Exchange. He earned 26 cents at $ 120.93 on Monday.
Brent crude, the international standard, gained 62 cents to $ 122.89 a barrel.
In foreign exchange trading, the dollar fell to 134.29 Japanese yen from 134.46 yen on Monday afternoon. The euro cost $ 1.0446, more than $ 1.0409.