US stocks opened in bear market territory on Monday, down 20 percent from their January peak, in a sign of growing pessimism about the outlook for the economy.
Markets around the world slumped, as higher-than-expected inflation and lower-than-expected economic growth raised expectations for interest rates and corporate earnings. Stocks in Asia and Europe fell, investors dumped government bonds, oil prices plummeted, and cryptocurrencies collapsed.
The S&P 500 fell 2.5 percent at the open of trading, with the sell-off continuing. The S&P 500 briefly fell into bear market territory Last month, before recovering to close a little above him. Markets have been nervous ever since, with the S&P 500 index last week posting its worst weekly loss since January.
Analysts at ING wrote in a note to investors Monday morning that the benchmark US stock index is now “within a bad one-day move into a bear market, and stock futures suggest we haven’t seen all of the negative sentiment expressed so far.” The S&P 500 has fallen in nine of the past 10 weeks.
Show Friday report a High rates of inflation In the US, which alarmed markets, as investors feared that the Federal Reserve may have to raise interest rates higher and faster than expected to curb rising prices, a move that could hurt the US economy.
Global investors have sold off stocks, bonds and other assets, with inflation rising in many countries, supply chains remaining on hold, and expectations of economic growth being lowered.
Stock markets in Asia closed deep in the red, with Japan’s benchmark Nikkei 225 index down 3 per cent and South Korea’s Kospi down 3.5 per cent. In Hong Kong, shares fell 3.4 percent, while the index of the largest Chinese companies listed in Hong Kong fell by 3.6 percent. The Japanese yen fell to a 24-year low against the US dollar.
Concerns in the region escalated on Monday after officials in Beijing and Shanghai reimposed social distancing measures after another round of mass testing over the weekend. China’s economic growth has been hit by the country’s “zero-Covid” epidemic policy that left most of the country under some form of lockdown for several months earlier this year.
In Europe, the Stoxx 600 index fell 2.2 percent, hitting its lowest level since early 2021. Britain’s FTSE 100 index fell 1.7 percent after news about the country’s economy Unexpectedly shrunk in April, down 0.3 percent from March. Economists had expected a slight increase in growth.
European bond prices fell sharply, as traders price in a series of interest rate increases European Central Bank Because it reacts to rising inflation across the eurozone. German and Italian government bond yields, which move inversely with prices, have been at multi-year highs, indicating a sharp rise in borrowing costs.
Cryptocurrencies, which some believe can be a haven in times of inflation and turmoil, have also been hit hard. Bitcoin, the largest cryptocurrency, has fallen to an 18-month low below $24,000. It has lost about half of its value this year so far. The value of all cryptocurrencies fell below $1 trillion for the first time since early 2021, according to Queen Market Capdown about $2 trillion from its peak.
“Infuriatingly humble analyst. Bacon maven. Proud food specialist. Certified reader. Avid writer. Zombie advocate. Incurable problem solver.”