Nasdaq futures lost 2%, with traders blaming an earnings warning from Snap, while S&P 500 futures fell 1.25%
24 May 2022 - 11:42
byWayne Cole and Lawrence White
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An employee passes share price information displayed on an electronic ticker board inside the London Stock Exchange Group’s offices in London, the UK. Picture: BLOOMBERG VIA GETTY IMAGES/LUKE MACGREGOR
Sydney/London — Shares slid worldwide on Tuesday as disappointing company earnings and fears about slowing global economic growth punctured the mini-rally of the last few trading days.
Nasdaq futures lost 2%, with traders blaming an earnings warning from Snap, which saw shares in the Snapchat owner tumble 28%, while S&P 500 futures slipped 1.25%.
That followed a 1.2% fall in MSCI’s broadest index of Asia-Pacific shares outside Japan, while the benchmark Stoxx index of European shares fell 0.92%.
All major sectors fell, with utilities and commodity-linked stocks leading declines, as investors awaited May purchasing managers index (PMI) data due in the morning session for clues about the slowing economy.
Citi analysts said their analysis showed bearish positioning on US equity futures had started to stabilise, and those holding “short” positions were closing out those bets after making hefty profits.
European stock market positioning remains short but here too the bearish momentum is slowing, they added.
The dollar index, which tracks its performance against a basket of major currencies, meanwhile fell 0.3% to 101.81, a one-month low.
The euro held near one-month highs as odds narrowed on a July rate rise from the ECB.
That saw the euro at $1.0727, having bounced 1.2% overnight in its best session since early March. It now faces stiff chart resistance around $1.0756.
Disappointing data
Markets had taken some comfort from US President Joe Biden's comment on Monday that he was considering easing tariffs on China, and from Beijing's ongoing promises of stimulus.
Unfortunately, China’s zero-Covid-19 policy and its lockdowns have already done considerable economic damage.
“Following disappointing April activity data, we have downgraded our China GDP forecast again and now look for 2Q GDP to contract 5.4% annualised, previously ‒1.5%,” warned analysts at JPMorgan.
“Our second-quarter global growth forecast stands at just 0.6% annualised rate, easily the weakest quarter since the global financial crisis outside of 2020.”
The early surveys of European and US manufacturing purchasing managers for May could show some slowing in what has been a resilient sector of the global economy.
Japan’s manufacturing activity grew at the slowest pace in three months in May amid supply bottlenecks, while Toyota announced a cut in its output plans.
Analysts have also been trimming growth forecasts for the US given the Federal Reserve seems certain to hike interest rates by a full percentage point over the next two months.
The hawkish message is likely to be driven home this week by a host of Fed speakers and minutes of the last policy meeting due on Wednesday.
The European Central Bank is also turning more hawkish, with President Christine Lagarde surprising many by opening the door for a rate rise as early as July.
The pullback in the dollar helped gold regain some ground to $1,856/oz.
Oil prices were caught between worries over a possible global downturn and the prospect of higher fuel demand from the US summer driving season and Shanghai's plans to reopen after a two-month coronavirus lockdown.
US crude eased 66c to $109.08 per barrel, while Brent fell 1.14% to $112.14.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Bear season beckons as global shares slip
Nasdaq futures lost 2%, with traders blaming an earnings warning from Snap, while S&P 500 futures fell 1.25%
Sydney/London — Shares slid worldwide on Tuesday as disappointing company earnings and fears about slowing global economic growth punctured the mini-rally of the last few trading days.
Nasdaq futures lost 2%, with traders blaming an earnings warning from Snap, which saw shares in the Snapchat owner tumble 28%, while S&P 500 futures slipped 1.25%.
That followed a 1.2% fall in MSCI’s broadest index of Asia-Pacific shares outside Japan, while the benchmark Stoxx index of European shares fell 0.92%.
All major sectors fell, with utilities and commodity-linked stocks leading declines, as investors awaited May purchasing managers index (PMI) data due in the morning session for clues about the slowing economy.
Citi analysts said their analysis showed bearish positioning on US equity futures had started to stabilise, and those holding “short” positions were closing out those bets after making hefty profits.
European stock market positioning remains short but here too the bearish momentum is slowing, they added.
The dollar index, which tracks its performance against a basket of major currencies, meanwhile fell 0.3% to 101.81, a one-month low.
The euro held near one-month highs as odds narrowed on a July rate rise from the ECB.
That saw the euro at $1.0727, having bounced 1.2% overnight in its best session since early March. It now faces stiff chart resistance around $1.0756.
Disappointing data
Markets had taken some comfort from US President Joe Biden's comment on Monday that he was considering easing tariffs on China, and from Beijing's ongoing promises of stimulus.
Unfortunately, China’s zero-Covid-19 policy and its lockdowns have already done considerable economic damage.
“Following disappointing April activity data, we have downgraded our China GDP forecast again and now look for 2Q GDP to contract 5.4% annualised, previously ‒1.5%,” warned analysts at JPMorgan.
“Our second-quarter global growth forecast stands at just 0.6% annualised rate, easily the weakest quarter since the global financial crisis outside of 2020.”
The early surveys of European and US manufacturing purchasing managers for May could show some slowing in what has been a resilient sector of the global economy.
Japan’s manufacturing activity grew at the slowest pace in three months in May amid supply bottlenecks, while Toyota announced a cut in its output plans.
Analysts have also been trimming growth forecasts for the US given the Federal Reserve seems certain to hike interest rates by a full percentage point over the next two months.
The hawkish message is likely to be driven home this week by a host of Fed speakers and minutes of the last policy meeting due on Wednesday.
The European Central Bank is also turning more hawkish, with President Christine Lagarde surprising many by opening the door for a rate rise as early as July.
The pullback in the dollar helped gold regain some ground to $1,856/oz.
Oil prices were caught between worries over a possible global downturn and the prospect of higher fuel demand from the US summer driving season and Shanghai's plans to reopen after a two-month coronavirus lockdown.
US crude eased 66c to $109.08 per barrel, while Brent fell 1.14% to $112.14.
Reuters
JSE falls as rising Chinese Covid-19 cases hit sentiment
Asian stocks dip after US futures slide
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