U.S. markets point to sharp declines following global sell-off

NEW YORK –

U.S. markets are expected to open lower on Monday, as investors feel pressured by interest rate hikes in China and a slower economy in the United States.

Dow Jones Industrial futures declined 1.6% and the S&P 500 fell 2%. European shares fell in midday trading, while Asian benchmarks ended lower.

Wall Street was in turmoil last week, with the stock market suffering its fifth consecutive weekly decline. Investors weighed a strong U.S. job report against fears that the Federal Reserve could cause a recession as part of its efforts to stop inflation.

Although the Fed hopes to raise rates and slow down the economy enough to stop the inflation that has been the highest in 40 years, it could impede growth if it does so too fast or too often.

China reported that its April exports increased 3.7% in April compared to a year ago, to $273.6 billion. This is a sharp decline from March’s 15.7% growth. This added to the pressure on China’s second-largest economic after Shanghai. Other industrial cities were also shut down in order to combat virus outbreaks.

According to the previous month’s sub-1 % growth, imports grew 0.7% to $222.5 trillion in April.

Investors and companies worry that the “zero COVID” strategy of the ruling Communist Party, which temporarily shut down most businesses in Shanghai and other industrial centers, is disrupting global trade.

A slowing global economy is taking its toll.

“China’s COVID-19 virus outbreak is partially to blame. This has resulted in manpower shortages as well as bottlenecks in logistics. Julian Evans-Pritchard says it’s important to not underestimate the impact of these disruptions. saidCommentary. “Instead of falling exports, it seems that softer demand is the main reason for the drop.”

The Shanghai Composite saw little change, with an increase of 0.1% to 3,004.14. Hong Kong’s markets were closed on Monday due to a national holiday.

Japan’s benchmark Nikkei225 lost 2.5% to reach 26,319.34. South Korea’s Kospi fell 1.3% to 2,610.81. Australia’s S&P/ASX 200 dropped 1.2% to 7,120.70. The benchmark index in Jakarta, Indonesia, fell 4.4% after markets reopened following the Eid al-Fitr holiday.

Europe’s CAC 40 fell 2.1% in Europe midday trading. Germany’s DAX fell 1.8%. Britain’s FTSE 100 was 1.9% lower.

Other than concerns about inflation, coronavirus restrictions and the war in Ukraine, there is still uncertainty. Ukrainian officials said that more than 60 people were believed to have been killed when a Russian bomb exploded at a shelter school. said. Moscow’s forces launched an assault on the defenders of Mariupol’s steel plant, in an apparent race against time to capture the city before Russia’s Victory Day holiday Monday.

“Russia’s Victory Day today will also bring back geopolitical risk into the spotlight.” Although President Putin may reaffirm his justification for war in Ukraine, the markets will be monitoring any additional efforts to intensify military operations to ensure the war. saidYeap Jun Rong is a market strategist at IG Singapore.

Even the energy sector is being under pressure, despite its stellar performance in recent weeks. Although benchmark U.S. crude fell by $2.88 to $106.89 a barrel in electronic trading at the New York Mercantile Exchange (NYMEX), it is still up over 40% this year. Brent crude, which is used to price oil for international trading, fell $2.74 to $109.65 per barrel.

The U.S. dollar rose from 130.55 to 131.06 Japanese Yuan in currency trading. The euro was $1.0540 compared to $1.0545.