Economic fears hit global equities, commodities; Twitter lifts Wall Street

WASHINGTON/LONDON, April 25 (Reuters) – European stocks fell to a one-month low and commodity prices fell on Monday on renewed concerns about rising interest rates and the shattered economy of China, while shares on Wall Street rose, reversing losses after Twitter agreed to be bought by billionaire Elon Musk.

Fears over COVID-19 outbreaks in China spooked investors who were already worried that rising US interest rates would hurt economic growth. US stocks fell for most of the session, extending the steep declines of last week. The CBOE Volatility Index (.VIX), known as Wall Street’s fear gauge, hit its lowest level since mid-March.

Twitter Inc (TWTR.N) shares rose on news that Elon Musk, the world’s richest person, has reached a deal to pay $44 billion in cash for the social media platform populated by millions of users and world leaders. Read more

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After the deal was announced, Wall Street reversed course on a late rally in growth stocks, and the Nasdaq ended sharply higher.

The Dow Jones Industrial Average (.DJI) rose 0.7% to end at 34,049.46 points, while the S&P 500 (.SPX) gained 0.57% to 4,296.12.

The Nasdaq Composite (.IXIC) climbed 1.29% to 13,004.85.

“You can tell growth wanted to rally all day but the market was holding it back. The news from Twitter came in and it was just a green light to start buying some of the growth names. They were oversold for a while,” Dennis Dick said. , trader at Bright Trading LLC.

Earlier, the European STOXX 600 index (.STOXX) fell 1.8% to close at its lowest since mid-March. Commodity stocks fell 6% as global concerns overshadowed relief from French presidential results on Sunday which saw Emmanuel Macron edge out far-right challenger Marine Le Pen.

The MSCI benchmark for global equity markets (.MIWD00000PUS) fell 0.41% to 668.85. Emerging market stocks (.MSCIEF) fell 2.61%. Overnight, Asian markets suffered their worst daily decline in more than a month on fears that Beijing could slip back into a COVID-19 lockdown.

“The rebound in equities from the first-quarter correction hit a wall of rising long-term interest rates,” Morgan Stanley chief investment officer Lisa Shale said in a note.

“As the Fed talks about a faster and deeper balance sheet reduction than expected, real yields are approaching zero from deep negative territory. With the 10-year US Treasury nominal at 2.9% , the equity risk premium

dropped.”

The euro slipped 0.9%, near the session low and its weakest level since the initial COVED panic of March 2020.

“The reality is that there is more to the story of the French elections than Macron’s victory yesterday,” said Rabobank FX strategist Jane Foley.

France will hold legislative elections in June, and Macron also appears likely to keep up the push for a European ban on Russian oil and gas imports, which would cause near-term economic hardship.

“We had German officials say last week that if there was an immediate embargo on Russian energy, it would cause a recession in Germany. … it would drag the rest of Europe down and have repercussions on the rest of the world,” Foley said.

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Chinese state television reported that residents were ordered not to leave Beijing’s Chatoyant district after a few dozen COVID cases were detected over the weekend. Read more

The Chinese yuan fell to its lowest level in a year as Chinese stocks suffered their biggest fall since the pandemic-induced panic sell-off in February 2020. .SSE

The dollar index rose 0.65% and hit a two-year high. It hit a high of $1.0695 against the euro.

Investors are wondering how fast and how far the Federal Reserve will raise U.S. interest rates this year and whether that and other global stresses will tip the global economy into recession.

This week will be rich in business results. Nearly 180 companies in the S&P 500 index are due to report. Among major US tech companies, Microsoft and Google reported on Tuesday, Facebook on Wednesday, and Apple and Amazon on Thursday.

In Europe, 134 of the Stoxx 600 will publish their results, including the banks HSBC, UBS and Santander on Tuesday, Credit Suisse on Wednesday, Barclays on Thursday and NatWest and Spain’s BBVA on Friday.

“I wonder if just meeting expectations will be enough, I feel like we may need a little more,” said Rob Carnell, ING’s Asia chief economist, referring to concerns about big tech following a disastrous report from Netflix last week.

Global stocks suffer one of worst start to year ever

FEAR FACTOR

Hong Kong’s Hang Seng Index (.HSI) fell 3.7% and the Shanghai Composite Index (.SSEC) fell more than 5%.

China’s central bank had set the midpoint of the yuan’s trading band at an eight-month low, seen as an official nod to the currency’s slide, and the yuan sold off further, at a 1-year low of 6.5092 to the dollar.

The rising dollar sent spot gold down 1.7% as of 4:53 p.m. EST (2053 GMT). US gold futures fell nearly 2% to $1,896. Palladium prices fell almost 10% on concerns about Chinese demand.

In oil, Brent crude closed down 4% at $102.32 a barrel and US crude settled down 3.5% at $98.54, its first close below $100. since April 11.

Eurozone bond yields fell.

Money markets are pricing in a 1 percentage point hike in U.S. interest rates at the next two Fed meetings and at least 2.5 points for the year, which would be one of the biggest annual increases never recorded.

This week will also see the release of US growth data, European inflation figures and a policy meeting from the Bank of Japan, which will be watched for any hint of response to a sharp fall in the yen, which has lost 10% in about two months. .

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Additional reporting by Bansari Mayu Kamdar, Noel Randewich, Tom Westbrook; Editing by Bernadette Baum, Catherine Evans, Mark Heinrich, Marguerita Choy and David Gregorio

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