(Bloomberg) — European stocks and oil fell while bonds rose as more evidence of a slowdown in China’s economy emerged.
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LVMH and Hermès International fell more than 4%, leading the fall in French luxury stocks and sending the CAC40 index down 1.3%. Cartier owner Richemont reported an unexpected drop in sales in the Americas, down 9%.
After a week of historic stock market gains, investors got off to a soft start on Monday after China’s second-quarter growth data came in weaker than expected. Despite rising interest rates in the US and Europe, the theory that Chinese shoppers coming out of coronavirus lockdowns could drive the global economy has become increasingly bleak as economic reports continue to suggest slowing momentum. It is becoming stable.
“The slowdown in growth in China has been brewing in the background over the last few months,” said Pooja Kumla, senior European rates strategist at Toronto-Dominion Bank. “Growth is clearly not keeping up with expectations.”
Ukraine grain trade collapses, raising food supply concerns
Global stocks MSCI ACWI fell 0.1% on Monday after surging 3% last week. Stocks in mainland China had the worst performance in Asia.
European stocks are particularly vulnerable because of their heavy reliance on the Chinese import market. Companies related to energy and raw materials together account for about 12% of the Stoxx Europe 600, while the consumer goods industry accounts for his 11%. Strategists at JPMorgan Chase & Co. expect further weakness in the region due to lower bond yields and disappointing earnings.
Bonds have rallied higher as investors try to avoid a stock and economic downturn. The 10-year U.S. Treasury yield fell five basis points to 3.77%.
Crude futures fell 1.5% as traders weighed disappointing Chinese economic data and Libya’s resumption of supplies and signs of market tightening.
In other commodity markets, wheat futures surged after Russia terminated a grain export deal, jeopardizing a key trade route from Ukraine, one of the world’s top grain and vegetable oil exporters.
Activision Blizzard also rose 4% in U.S. premarket trading on Friday after a U.S. appeals court rejected a Federal Trade Commission proposal to suspend Microsoft’s takeover of the company.
The next pressure point in the market will be earnings, with hundreds of companies due to be announced in the coming weeks. Earnings for the S&P 500 companies are expected to fall 9% in the second quarter, the worst season since 2020, according to data compiled by Bloomberg Intelligence. It could get even worse in Europe, where a 12% drop is expected.
This week’s main events:
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G20 finance ministers and central bank governors meet in India on Monday
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European Central Bank President Christine Lagarde to speak on Monday
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US Imperial Manufacturing, Monday
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U.S. Retail Sales, Industrial Production, Business Inventories, Cross-Border Investments, Tuesday
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Eurozone, UK CPI, Wednesday
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US housing starts Wednesday
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China loan prime rate, Thursday
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U.S. Initial Jobless Claims, Existing Home Sales, Conf. Leading Index, Thursday
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Japanese CPI, Friday
The main movements in the market are:
stock
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S&P 500 Futures Little Changed as of 7:03 a.m. New York Time
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Nasdaq 100 Futures Little Change
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Dow Jones Industrial Average futures down 0.2%
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Stoxx European 600 down 0.6%
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MSCI World Index down 0.1%
currency
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Bloomberg Dollar Spot Index Little Change
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The euro was little changed at $1.1231.
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The British pound fell 0.1% to $1.3077.
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The Japanese yen rose 0.5% to 138.15 yen to the dollar.
Cryptocurrency
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Bitcoin fell 0.4% to $30,178.58.
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Ether fell 0.9% to $1,911.99.
bond
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The 10-year Treasury yield fell 5 basis points to 3.78%.
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German 10-year bond yields fell 5 basis points to 2.46%.
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UK 10-year bond yields fell 5 basis points to 4.39%.
merchandise
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West Texas Intermediate crude fell 1.1% to $74.44 a barrel.
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Gold futures rose 0.1% to $1,961.50 an ounce.
This article was produced in partnership with Bloomberg Automation.
–With help from John Viljoen and Ksenia Garouchko.
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