# COVID, War and Fed push world stocks down for 4th day
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-03-15
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Global Markets Suffer as COVID, Ukraine War, Rate Hikes
Meta Description: World stocks slide for fourth day on COVID surge in China, Ukraine war, and Fed rate hike fear. Markets remain fragile amid falling oil prices and central banks tightening policies.
URL: https://financedigest.com/covid-war-and-fed-push-world-stocks-down-for-4th-dayhtml

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By Tommy Wilkes and Saikat Chatterjee

LONDON (Reuters) – World stocks fell for a fourth consecutive session on Tuesday as a combination of rising COVID-19 cases in China, the war in Ukraine and worries about the Federal Reserve raising interest rates this week for the first time since 2018 hit confidence.

Though oil prices tumbled more than 5% with Brent crude back below $100 a barrel, spelling some relief for battered European stock markets and the euro currency, the market rebound signalled that sentiment was fragile.

In midday London trading, Euro STOXX was 1.1% weaker, France’s CAC 40 was down 1.1%, Britain’s [FTSE was 0.8% lower](https://www.financedigest.com/cyclicals-bat-drag-ftse-100-lower-ahead-of-fed-decision.html "Cyclicals, BAT drag FTSE 100 lower ahead of Fed decision"). U.S. [stock futures](https://www.financedigest.com/us-stock-futures-bonds-rally-as-markets-flirt-with-fed-pause.html "US stock futures, bonds rally as markets flirt with Fed pause") were up 0.2%

The forthcoming Fed and BOE [meetings are seeing equities under pressure as the markets anticipate that central banks](https://www.financedigest.com/banking-stability-worries-go-behind-closed-doors-at-imf-world-bank-meetings.html "Banking stability worries go behind closed doors at IMF-World Bank meetings") will continue to focus on bearing down on rising inflationary pressures, ignoring the potential need for looser policy against the backdrop of a deteriorating growth outlook,” said Stuart Cole, head macro economist at Equiti Capital.

[European stocks](https://www.financedigest.com/european-stocks-hit-six-week-high-on-hopes-for-rate-hike-slowdown.html "European stocks hit six-week high on hopes for rate hike slowdown") had been rebounding in recent sessions but they remain down sharply in 2022.

A net 69% of respondents in a monthly [fund manager survey expect the European](https://www.financedigest.com/collegiate-ac-and-shuman-capital-launch-e300-million-european-student-living-fund.html "Collegiate AC and Shuman Capital launch €300 million European Student Living Fund") economy to weaken over the coming year, the highest share since 2011, according to BoFA.

The 81 percentage point [swing from February’s net 12% who still expected](https://www.financedigest.com/portuguese-airline-tap-swings-to-profit-earlier-than-expected.html "Portuguese airline TAP swings to profit earlier than expected") to see growth marks the biggest month-on-month drop since 1994.

In the United States, another sharp [drop left the Nasdaq 100 down more than 20% from its record](https://www.financedigest.com/bentley-cruises-to-record-sales-in-2022-despite-china-drop.html "Bentley cruises to record sales in 2022 despite China drop") peak late last year. [Wall Street](https://www.financedigest.com/wall-street-drops-treasury-yields-gyrate-on-fed-chairman-powells-remarks.html "Wall Street drops, Treasury yields gyrate on Fed Chairman Powell’s remarks") futures pointed to more pain at the open.

The MSCI World Index shed 0.2% and flirted with a one-year low [hit last week](https://www.financedigest.com/sterling-hits-2-1-2-week-high-eyes-on-boe.html "Sterling hits 2 1/2 week high, eyes on BoE").

A lack of major progress in Ukraine-Russia [talks on Monday added to the nervousness while concerns grew of possible new tensions between China](https://www.financedigest.com/exclusive-allianz-in-talks-with-banks-for-china-asset-management-venture-sources.html "Exclusive-Allianz in talks with banks for China asset management venture -sources") and the United States.

Washington has [warned Beijing against providing military or financial help to Moscow after Russia’s](https://www.financedigest.com/barclays-warns-of-sub-parity-euro-5-ppt-gdp-hit-if-russia-turns-off-gas-taps.html "Barclays warns of sub-parity euro, 5 ppt GDP hit if Russia turns off gas taps") invasion of Ukraine.. Chinese companies listed in New York fell sharply during premarket trade on Tuesday.

The question we are asking is whether the markets have reached peak bearishness,” said Jack Siu, [Credit Suisse’s](https://www.financedigest.com/some-credit-suisse-at1-bondholders-seek-legal-advice-law-firms.html "Some Credit Suisse AT1 bondholders seek legal advice -law firms") chief investment officer for Greater China.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 2.82%, led by pronounced weakness in [Chinese stocks](https://www.financedigest.com/chatgpt-mania-pumps-up-chinese-ai-technology-stocks.html "ChatGPT mania pumps up Chinese AI technology stocks"). The [index is down 11% so far this month](https://www.financedigest.com/world-food-price-index-falls-for-sixth-month-in-sept-fao.html "World food price index falls for sixth month in Sept -FAO").

![](https://www.globalbankingandfinance.com/wp-content/uploads/2022/03/APAC_vs-world_valuations_MSCI-indexes_Mar-14.jpg)

[Hong Kong’s](https://www.financedigest.com/citadel-accelerates-hiring-push-in-hong-kong-and-london.html "Citadel accelerates hiring push in Hong Kong and London") Hang Seng Index remained mired in negative territory on Tuesday, dropping 5.8% following an almost 5% selloff a day earlier. Hong Kong’s main board is down 19% so far in [March — the index has not fallen so heavily in one month since](https://www.financedigest.com/the-nasdaq-100-on-track-to-have-its-best-week-since-march-2010.html "The Nasdaq 100 On Track to Have its Best Week Since March 2010") 2008.

The city’s tech index has been hammered, falling 32% this [month as investors](https://www.financedigest.com/6-months-to-go-until-brexit-and-investor-sentiment-remains-bold.html "6 months to go until Brexit and investor sentiment remains bold") worry about the next regulatory crackdown from U.S. and Chinese authorities on the sector.

ATTENTION [TURNS TO THE FED](https://www.financedigest.com/world-stocks-turn-positive-in-may-on-fed-bets.html "World stocks turn positive in May on Fed bets")

Adding to market jitters are [rising case numbers of COVID-19 in China](https://www.financedigest.com/wall-st-stocks-fall-bond-yields-rise-as-china-drops-quarantine-rule.html "Wall St stocks fall, bond yields rise as China drops quarantine rule"), which investors fear will hurt the mainland’s economic growth in the first quarter.

China on Tuesday reported 3,602 new confirmed [coronavirus cases](https://www.financedigest.com/u-s-coronavirus-cases-hit-new-high-hospitalizations-creep-up.html "U.S. coronavirus cases hit new high, hospitalizations creep up"), compared with 1,437 on Monday.

Brent crude fell nearly 7 % to $99.67.per barrel, while U.S. crude tumbled nearly 8% to $94.98 a barrel. Crude [prices topped $130 a barrel only last week as investors fretted about a shortage of supplies](https://www.financedigest.com/oil-prices-rise-as-china-eases-covid-curbs-u-s-storm-fuels-supply-worries.html "Oil prices rise as China eases COVID curbs, U.S. storm fuels supply worries") worsened by sanctions against Russia after it invaded Ukraine.

[Investor focus](https://www.financedigest.com/tesla-investors-to-focus-on-demand-issues-in-earnings-report.html "Tesla investors to focus on demand issues in earnings report") is also on the U.S Federal Reserve, which meets on Wednesday and is expected to [lift interest rates](https://www.financedigest.com/shares-steady-dollar-dips-as-us-holiday-lifts-rates-gloom.html "Shares steady, dollar dips as US holiday lifts rates gloom") for the first time in three years to offset rising inflation.

All eyes are on whether the Fed [pushes a hawkish](https://www.financedigest.com/hawkish-ecb-comments-push-up-rate-hike-expectations.html "Hawkish ECB comments push up rate-hike expectations") line and a commitment to keep raising until inflation is under control.

We are not convinced by the ultra-hawkish arguments, but the FOMC may not be willing to consider dovish scenarios without clear signs of slowing economic growth,” said Steve Englander, global G10 FX research head at [Standard Chartered](https://www.financedigest.com/bitcoin-could-hit-100000-by-end-2024-standard-chartered-says.html "Bitcoin could hit 0,000 by end-2024, Standard Chartered says").

We think lagging real wages and [falling disposable income](https://www.financedigest.com/four-fifths-of-uk-households-saw-disposable-income-fall-in-august-says-asda.html "Four fifths of UK households saw disposable income fall in August, says Asda") will lead to a pause after July, but doubt the FOMC is ready to consider that case just yet.

The [yield on the benchmark 10-year Treasury](https://www.financedigest.com/wall-street-stocks-power-higher-as-treasury-yields-and-dollar-ease.html "Wall Street stocks power higher as Treasury yields and dollar ease") notes rose to 2.169%, the highest since mid-2019.

The two-year yield, which rises with traders’ expectations of [higher Fed fund rates](https://www.financedigest.com/powells-warning-on-higher-u-s-rates-pushes-dollar-to-3-mth-high.html "Powell’s warning on higher U.S. rates pushes dollar to 3-mth high"), touched 1.894% in Asian trading, a 2-1/2 year high, before falling back to 1.833%.

The euro, which was hammered last week on concerns the [war in Ukraine would hurt the regional economy](https://www.financedigest.com/euro-zone-economy-sentiment-rises-in-dec-first-time-since-start-of-ukraine-war.html "Euro zone economy sentiment rises in Dec, first time since start of Ukraine war"), rebounded and was last up 0.5% at $1.099. The dollar index fell 0.4%.

Gold [prices slipped](https://www.financedigest.com/oil-prices-slip-as-economic-fears-offset-tightening-crude-supplies.html "Oil prices slip as economic fears offset tightening crude supplies") 1% to $1,930.

(Reporting by Tommy Wilkes and Saikat Chatterjee; Additional reporting by Scott Murdoch in SYDNEY; Editing by Susan Fenton and Raissa Kasolowsky)


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