US and European stock markets suffer worst quarter since pandemic

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Global stocks fell on Thursday, with US stocks falling more than 1.5%, as worries about a recession and the Russian-Ukrainian war boosted sales, while oil prices fell more than $6. as Washington launched a record release of its emergency oil reserves.

The declines pushed U.S. and European stocks into their biggest quarterly loss since the start of 2020, when the outbreak of the COVID-19 pandemic sent the global economy plummeting.



Portfolio rebalancing late in the quarter boosted demand for bonds and kept yields low, even as a closely watched part of the US Treasury yield curve came close to inverting, after briefly inverting on Tuesday. Many consider an inverted yield curve, in which short-term Treasuries yield more than longer-term debt, as a harbinger of a recession. [US/]

“An inverted treasury yield curve is a signal that future U.S. equity returns will be disappointing,” said Nicholas Colas, co-founder of DataTrek Research.

“Can we escape the fate of low or negative yields in 2022 if 10-year Treasury yields fall below two years? Maybe, but not if geopolitical risks and their effects on oil prices continue or increase.

A late-day selling spurt sent the S&P 500 down 1.6%. The Dow Jones Industrial Average also slipped 1.6% and the Nasdaq Composite fell 1.5%. The European STOXX 600 had closed down 0.94%.

Thursday’s sluggishness in stock markets was emblematic of March’s difficulty for equities. Even after a rally last week when investors celebrated signs of progress in peace talks between Russia and Ukraine, the S&P 500 is still down 5% in the first three months, its worst quarterly performance. in 2 years.

Europe’s STOXX 600 fared worse, losing 6.5% in the first quarter, also its biggest quarterly decline since the start of 2020.

The MSCI World Equity Index, which fell 1.3% on Thursday, also had its worst quarter in two years, tumbling 5.7%.

“Risk assets remain vulnerable,” analysts at Australian bank ANZ said. “As the US earnings season kicks off around April 11, many analysts are expecting a wave of earnings downgrades.”

GROWTH CONCERNS

After a relief rally earlier in the week, optimism about a settlement between Russia and Ukraine faded as Ukrainian President Volodymyr Zelenskiy said no quick resolution was expected and the country was preparing for new Russian attacks.

In Europe, inflation data showed record price increases in France in March and a 7% year-on-year rise in Italy, after high readings in Germany and Spain a day earlier.

Rising price pressures in many major economies sealed expectations that central banks would raise interest rates. Investors fear that aggressive tightening in the United States and other countries could cause recessions.

While European government bond yields were down on the day, the German 10-year yield was expected to see its biggest monthly rise since 2009.

In line with the recent surge in yields, the 10-year US Treasury yield rose the most in a year this quarter, despite falling to 2.343% on Thursday.

Oil prices suffered heavy losses after news that the United States was releasing up to 180 million barrels of its strategic oil reserve, amid lower fuel prices.

U.S. crude fell 5.4% to $107.29 a barrel and Brent to $100.74, down 6.6% on the day.

Oil prices have surged since Russia invaded Ukraine in late February and the United States and its allies have responded by imposing heavy sanctions on Russia, the second-largest exporter of crude.

The euro was down 0.82% at $1.1066, having been boosted earlier in the week by peace hopes in Ukraine.

The dollar was little changed against the yen, at 121.675. The yen stabilized after Monday, when it fell to its lowest level since 2015 following the announcement that the Bank of Japan will buy unlimited 10-year government bonds for four days this week to maintain low yields.

Rising US yields pushed Japanese yields higher even though inflation in Japan is below the central bank’s target.

Gold rose 0.2% to $1,937.45 an ounce, posting its biggest quarterly gain since the second quarter of 2020.

In line with investors’ lower appetite for risk, Bitcoin fell 2.8% to $45,771.20.

(Reporting by Elizabeth Howcroft; Editing by Catherine Evans, Kirsten Donovan, Barbara Lewis and David Gregorio)

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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