Daily market review

United States

Investors dumped stocks again Monday as markets see steep rate increases even as Ukraine and Covid worries weigh on growth prospects. The Dow Jones industrial average lost 2.0 percent, the S&P 500 dropped 3.2 percent and the NASDAQ plunged 4.3 percent.

Risk appetite took another big hit on rising concerns that global growth will be hampered by aggressive rate increases from the Federal Reserve and other leading central banks, and by China's anti-Covid restrictions, plus more sanctions and uncertainty linked to the Ukraine situation. Markets are now pricing in another 200 basis points of Fed rate increases by year end.

The selloff in equities continued with the S&P 500 falling below 4,000 even as a safe-haven bid for US Treasuries pushed US yields lower late in the day. The 10-year note yield touched 3.20 percent early Monday before it fell back as stocks were routed. Energy and other cyclicals were hit hard, along with highly valued megacaps and other growth stocks. Defensive plays including consumer staples and utilities outperformed as most sectors were routed.

Among megacaps in focus, Amazon dropped 5.2 percent, and Microsoft and Meta/Facebook both fell 3.7 percent. Among Dow stocks, Chevron dropped 6.7 percent, and Boeing fell 10.5 percent. Among travel & leisure stocks, Norwegian Cruise fell 13 percent, and Wynn Resorts lost 7.5 percent.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil dropped US$7.97 to US$105.11 while spot gold dropped US$28.29 to US$1,853.23. The US dollar was mixed vs. most major currencies. The US Treasury 30-year bond yield fell 5 basis points at 3.17 percent, and the 10-year note yield fell 9 basis points to 3.04 percent.


Equities tanked again Monday in a global risk-off move. The Europe-wide STOXX fell 2.9 percent, the French CAC dropped 2.8 percent, the German DAX lost 2.2 percent and the FTSE 100 was down 2.3 percent.

Equities dropped on more bearish fallout from the Ukraine conflict and supply chain trouble. Western allies tightened sanctions against Russia while China continued its zero-Covid policy and Chinese trade data confirmed its slowdown. Bond yields continued rising through the European trading hours amid inflation concerns and expectations for central bank policy tightening despite signs of slowing global growth. European Central Bank officials weighed in over the weekend with more threats of near-term rate increases.

Among sectors, travel & leisure took a hit with EasyJet down 2.3 percent after saying it has cut back seating due to staff shortages. Basic resources suffered as commodity prices fell due to China's strict anti-Covid stance. Technology shares continued to sell off in response to rising interest rates. Defensive plays including telecom and utilities held up relatively well.

Asia Pacific

Asian equities remained under pressure Monday on persistent gloom over rising inflation and interest rates, Covid worries, and no sign of letup in the Ukraine conflict.

Equities were hurt by Chinese Premier Li Keqiang's warning that China faces a "complicated and grave" employment situation as Beijing and Shanghai tighten restrictions to slow the pandemic. Chinese merchandise trade figures reflected slowing business owing to Covid outbreaks, with exports growth from a year earlier at 3.9 percent in April vs. 14.7 percent in March. Dollar strength weighed on regional markets.

China's CSI 300 index declined 0.8 percent and the Shanghai index rose 0.1 percent. Taiwan's Taiex dropped 2.2 percent. South Korea's KOSPI lost 1.3 percent. Hong Kong was on holiday.

Rising interest rates and economic slowdown fears hit Japanese equities with the Nikkei 225 down 2.5 percent and the TOPIX down 2.0 percent. Most sectors fell, led by air transportation, services, iron & steel, technology, automakers, and banks.

Indian equities retreated with the BSE Sensex down 0.7 percent.

Risk aversion and rising interest rates hurt Australian equities with the All Ordinaries index falling 1.5 percent. Technology and bond proxies were among the day's laggards.

Looking ahead*

In Asia/Pacific, Japanese household spending and Australian NAB business survey reports are due. In Europe, Italian industrial production, and German ZEW survey reports are on the schedule. In North America, US NFIB business sentiment reports are on tap.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies