Global financial markets were mixed on Monday, with U.S. Treasury bond prices falling ahead of this week’s Federal Reserve monetary policy meeting, and European stocks rising on hopes of a futures meeting. negotiations between Russia and Ukraine.
Yields on 10-year US Treasuries, which are inversely proportional to the price of government debt benchmarks and resonate with borrowing costs around the world, rose 0.04 percentage points to 2.05%, the highest since mid-February.
On the stock market, Stoxx Europe 600’s stock index has fallen more than a tenth this year as investors grow increasingly concerned about sanctions against Russia choking commodity supplies and triggering a recession. decline, adding 0.5%.
But elsewhere, shares in China fell on signs that widespread shutdowns could become common again as the world’s second-largest economy deals with the Covid-19 outbreak- 19 largest since the beginning of the pandemic two years ago.
At its March 16-17 meeting, the Fed was tipped to raise its key funds rate by at least a quarter of a point, after pinning it near zero since the start of the coronavirus crisis two years ago, in a move that could influence central banks to raise borrowing costs despite the economic risks of the Ukraine war.
Consumer price inflation in the US increased to an annualized rate of 7.9% in February, a 40-year high, while price growth has also hit record levels in the euro area and are is expected to exceed 7% in the UK this spring.
“Chairman Jay Powell has signaled that the US Federal Reserve will start raising interest rates at 25 [basis point] move,” said analysts at research firm Gavekal in a note to clients.
“However, a 50bp increase cannot be ruled out as inflation and inflation expectations continue to soar.”
Hong Kong’s Hang Seng index fell 5.3% and China’s CSI 300 index fell 3.1% after Shenzhen’s 17.5 million residents were locked down contains an increase in cases of the Omicron coronavirus variant.
These measures follow similar measures in Changchun, a city of 9 million people in northeastern China, with cases also increasing in Shanghai and several other major cities.
China reported more than 1,800 cases of Covid-19 on Sunday, the most daily in two years, as authorities struggled to contain the country’s biggest outbreak since the coronavirus appeared in Wuhan in 2020.
Raymond Yeung, chief economist for Greater China at ANZ, said: “If the embargo is prolonged, China’s economic growth will be affected significantly. Yeung added that “half of China’s GDP and population will be affected during this time”, and that a one-week shutdown of the affected area could reduce economic growth by about 0.1 percentage point. of the country this year.
The Hang Seng Tech index of major Chinese tech stocks fell more than 11%.
Oil standards also fell on hopes that Russia would be more willing to engage in serious negotiations with Ukraine.
“If you compare the positions of both delegations at the talks at the beginning and now, there has been considerable progress,” Leonid Slutsky, one of the Russian negotiators, said in an interview. Interview with RT Arabic, a Russian state news channel. .
Brent crude, the international benchmark, fell 3.3% to $109 a barrel and US firm West Texas Intermediate fell 3.6% to $105 after signs of movement in the talks.
“Oil prices continue to exhibit volatility due to increased supply uncertainty from outside Russia, in addition to continued geopolitical risks from war,” said Kaushal Ramesh, senior analyst at Rystad Energy. .
