# Stocks, commodities prices tumble on hawkish Fed, China worries Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-04-25 Category: INVESTING Category URL: https://financedigest.com/category/investing Meta Title: Global Markets Reel Amid Macron's Victory and Economic Meta Description: Stay updated on the latest market trends following Emmanuel Macron's win in the French election and worries over rising global interest rates and China's economic challenges. URL: https://financedigest.com/stocks-commodities-prices-tumble-on-hawkish-fed-china-worrieshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-04-25t090231z1lynxnpei3o0ahrtroptp4global-markets-1736815836082-compressed.jpg) By Chris Prentice and Marc Jones WASHINGTON/LONDON (Reuters) -Traders ditched riskier assets on Monday as relief over Emmanuel Macron’s victory in the French presidential election quickly gave way to renewed concerns about rising global interest rates and China’s spluttering economy. Wall Street extended last week’s sharp sell-off as fears over China’s COVID-19 outbreaks spooked investors already worried about faster U.S. interest [rate hikes denting economic](https://www.financedigest.com/stocks-falter-as-economic-worries-nag-nz-delivers-big-rate-hike.html "Stocks falter as economic worries nag, NZ delivers big rate hike") growth. [Asian markets had suffered their worst day in over a month overnight on fears](https://www.financedigest.com/asian-shares-gain-as-fears-about-rapid-fed-hikes-bank-crisis-fade.html "Asian shares gain as fears about rapid Fed hikes, bank crisis fade") that Beijing was about to go back into a COVID-19 lockdown, and as Friday’s 2.5% Wall Street slump lingered on U.S. [futures markets](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") \[.N\]. Despite relief that Macron had eased past far-right challenger Marine Le Pen on Sunday, Europe’s STOXX 600 index fell back to mid-March lows, weighed down by 1.5% and 1.0% [drops in French and German shares](https://www.financedigest.com/saipem-shares-drop-group-says-cannot-explain-why.html "Saipem shares drop, group says cannot explain why"), respectively. The Dow Jones Industrial Average fell 403.29 points, or 1.19%, to 33,408.11, the S&P 500 lost 53.39 points, or 1.25%, to 4,218.39 and the Nasdaq Composite dropped 55.13 points, or 0.43%, to 12,784.17 by 11:09 a.m. EST (1509 GMT) Stocks’ rebound from the first quarter correction has [hit a wall of rising long-term interest rates,” Morgan Stanley’s Chief Investment](https://www.financedigest.com/uks-dominos-expects-tech-investments-to-hit-2023-profit.html "UK’s Domino’s expects tech investments to hit 2023 profit") Officer Lisa Shalett said in a note. “With the Fed talking about a faster and larger balance sheet reduction than anticipated, real yields are approaching zero from their deeply negative territory. With the nominal 10-year US Treasury cracking 2.9%, the equity risk premium has plummeted.” MSCI’s benchmark for [global equity](https://www.financedigest.com/rate-rise-fears-prompt-third-week-of-global-equity-funds-outflows.html "Rate rise fears prompt third week of global equity funds outflows") markets fell 1.42%. Emerging [markets stocks](https://www.financedigest.com/stocks-up-bond-yields-fall-as-markets-mull-a-fed-policy-pause.html "Stocks up, bond yields fall as markets mull a Fed policy pause") fell 2.83%. The euro slid as much 0.93% to its lowest [since the initial COVID panic of March](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") 2020. The reality is there is more to the [French election story than Macron’s](https://www.financedigest.com/macron-le-pen-clash-over-cost-of-living-in-french-election-debate.html "Macron, Le Pen clash over cost of living in French election debate") win yesterday,” said Rabobank FX strategist Jane Foley. Not only are there parliamentary elections still to come in France in June, but Macron also seems likely to [keep the pressure up for a Europe-wide ban on Russian oil](https://www.financedigest.com/oil-prices-rise-after-opec-keeps-output-steady-russian-price-cap-imposed.html "Oil prices rise after OPEC+ keeps output steady, Russian price cap imposed") and gas imports, which would cause serious economic pain, at least in the short term. We had [German officials saying](https://www.financedigest.com/german-minister-says-on-right-track-to-solving-co2-emitting-car-row.html "German minister says ‘on right track’ to solving CO2-emitting car row") last week that if there was an immediate embargo of Russian energy then it would cause a recession in Germany. And if there was a recession in Germany, that would drag the rest of Europe down and have [knock-on effects](https://www.financedigest.com/banking-turmoil-will-not-have-knock-on-effect-on-commodities-trafigura-cfo.html "Banking turmoil will not have knock-on effect on commodities -Trafigura CFO") for the rest of the world,” Foley said. Beijing worries saw the yuan skid to a one-year low. \[.SS\] State television in [China had reported that residents were ordered not to leave Beijing’s Chaoyang district after a few dozen COVID](https://www.financedigest.com/who-urges-china-to-share-specific-data-regularly-on-covid-situation.html "WHO urges China to share specific data regularly on COVID situation") cases were detected over the weekend. The dollar index rose 0.702%. The U.S. [dollar climbed unhindered to a two-year high and touched a peak](https://www.financedigest.com/dollar-edges-down-from-six-week-peak-swedish-crown-jumps.html "Dollar edges down from six-week peak, Swedish crown jumps") of $1.0695 against the euro. \[FRX/\] Much focus on is on how fast and far the Federal Reserve will raise U.S. interest rates this year and whether that, along with all the other current global strains, will help tip the [world economy](https://www.financedigest.com/at-chinas-largest-trade-fair-exporters-worry-about-world-economy.html "At China’s largest trade fair, exporters worry about world economy") into recession. This week is also a packed one for corporate earnings. Almost 180 S&P 500 index firms are due to report. Big U.S. tech will be the highlight, with [Microsoft and Google](https://www.financedigest.com/microsoft-unveils-ai-office-copilot-in-fast-moving-race-with-google.html "Microsoft unveils AI office copilot in fast-moving race with Google") on Tuesday, Facebook on Wednesday and Apple and Amazon on Thursday. \[.N\] In Europe, 134 of the Stoxx 600 will also put out results, including banks HSBC, UBS and Santander on Tuesday, [Credit Suisse](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") on Wednesday, Barclays on Thursday and NatWest and Spain’s BBVA on Friday. \[.EU\] I wonder whether just meeting expectations will be enough, it just feels like maybe we’ll need a bit more,” said Rob Carnell, ING’s chief economist in Asia, referring to jitters about [big tech](https://www.financedigest.com/startups-spring-from-ashes-of-big-tech-purge.html "Startups spring from ashes of Big Tech purge") following a dire report from Netflix last week. FEAR FACTOR Twitter [shares rose amid reports the company was set to accept Tesla-owner Elon Musk’s offer to buy](https://www.financedigest.com/uks-bellway-to-buy-back-shares-hike-social-housing-output.html "UK’s Bellway to buy back shares, hike social housing output") the microblogging site. Friday had seen the Dow Jones suffer its worst day since October 2020 and the CBOE volatility index, dubbed Wall Street’s “fear gauge”, continue to [drive higher](https://www.financedigest.com/maserati-aims-at-driving-margins-higher-before-any-spin-off-talk.html "Maserati aims at driving margins higher before any spin-off talk") on Monday. It has now risen 50% in the last few days. \[.N\] Monday’s earlier selloff in Asia also saw [Hong Kong’s](https://www.financedigest.com/screening-of-winnie-the-pooh-horror-film-cancelled-in-hong-kong.html "Screening of ‘Winnie the Pooh’ horror film cancelled in Hong Kong") Hang Seng fall 3.7% and the Shanghai composite index slide over 5% \[.SS\]. China’s central bank had fixed the mid-point of the yuan’s trading band at its lowest level in eight months, [seen as an official nod for the currency’s recent slide](https://www.financedigest.com/icrc-to-cut-some-1500-jobs-as-humanitarian-budgets-seen-sliding.html "ICRC to cut some 1,500 jobs as humanitarian budgets seen sliding"), and the yuan was sold further, to a one-year low of 6.5092 per dollar. The higher [dollar pushed spot gold](https://www.financedigest.com/stocks-and-gold-cheer-u-s-inflation-picture-while-dollar-slides.html "Stocks and gold cheer U.S. inflation picture, while dollar slides") 1.8% lower. Palladium [prices shed nearly 13% on worries over a hit](https://www.financedigest.com/uk-shop-price-inflation-hits-record-8-in-january-brc.html "UK shop price inflation hits record 8% in January: BRC") to Chinese demand. Elsewhere in commodities, [oil prices tumbled with Brent crude](https://www.financedigest.com/oil-dips-after-fed-comments-us-crude-stock-build.html "Oil dips after Fed comments, US crude stock build") down 5.19% and U.S. crude down $5.3%. U.S. [Treasury and euro zone bond yields](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") were also down.\[GVD/EUR\]\[US/\] Money markets are now [pricing in a 1 percentage point increase](https://www.financedigest.com/syngenta-4q-profit-falls-as-raw-material-prices-increase.html "Syngenta 4Q profit falls as raw material prices increase") in U.S. interest rates at the Federal Reserve’s next two meetings and at least 2.5 points for the year as a whole, which would be one of the biggest [annual increases](https://www.financedigest.com/coca-cola-hbcs-annual-profit-beats-warns-of-price-increases.html "Coca-Cola HBC’s annual profit beats, warns of price increases") ever. This [week will also see](https://www.financedigest.com/global-equity-funds-see-biggest-weekly-outflow-in-five-weeks.html "Global equity funds see biggest weekly outflow in five weeks") the release of U.S. growth data, European inflation figures and a [Bank of Japan policy meeting](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"), which will be watched for any hints of a response to a sharp fall in the yen, which has lost 10% in about two months. (Additional reporting by Tom Westbrook in Singapore; Editing by Bernadette Baum, Catherine Evans and Mark Heinrich) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---