December 7, 2022

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Stocks drop amid Beijing lockdown fears, dollar shines with interest rate hikes on the horizon

Stocks drop amid Beijing lockdown fears, dollar shines with interest rate hikes on the horizon

FIE PHOTO: A man wears a protective mask inside the Shanghai Stock Exchange building, in Pudong Financial District in Shanghai, China, February 28, 2020. REUTERS/Ali Song

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  • Chinese stocks, the yuan falls as the closing spread
  • The Australian dollar fell 1% as the dollar rose
  • Macron’s victory is a slim salve for the faltering euro

SINGAPORE (Reuters) – Asian shares hit their worst session in a month and a half on Monday as fears grew that Beijing was about to join Shanghai in closings, while the dollar rose to a likely two-year high. Slowing growth and rising interest rates.

MSCI’s broadest index of Asia Pacific shares outside Japan (MIAPJ0000PUS.) It fell 2.5% to a six-week low and the Chinese yuan slipped to a one-year low. Oil is down nearly 4%.

China’s state TV reported that residents were ordered not to leave Beijing’s Chaoyang District on Monday after discovering a few dozen cases over the weekend. Read more

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The risk-sensitive Australian dollar fell 1.2 percent and the euro fell 0.8 percent to a two-year low of $1.0707 as Emmanuel Macron was re-elected president of France on Sunday without any hurdles to the dollar’s rise.

With the war in Ukraine entering a third month and the lockdown of 25 million people in Shanghai about to enter its second month, investor sentiment has become fragile amid fears that rising consumer prices will lead to a rapid rise in global prices.

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S&P 500 futures are down 0.8% in Asia while FTSE futures and European futures are down more than 1.5%. Fed fund futures priced at 150 basis points of gains by the end of July.

Traders are also concerned about this week’s results in Apple Inc (AAPL.O) Inc (AMZN.O)Microsoft Corporation (MSFT.O) and Alphabet Inc (GOOGL.O) You risk disappointment.

“I wonder if just meeting expectations will be enough, it looks like we might need a little more,” said Rob Carnell, chief Asia economist at ING.

“It’s guidance about the future that is going to be as important as anything and I think most of these companies will come out and say that everything looks a little bit uncertain, which I don’t think will really help.”

US markets fell on Friday, when the Dow Jones (.DJI) It was his worst day since October 2020 and the CBOE Volatility Index (.VIX)Dubbed the “Fear Scale” on Wall Street, it jumped higher.

“Concerns about rates and stagnation are now the biggest risks for investors,” said Candice Browning, head of global research at Bank of America, with a particular focus on demand.

“Rising food and gasoline prices as well as the end of major stimulus programs are worrying investors about the ability of low-income consumers to spend.”

Hang Seng in Hong Kong (.HSI) It fell 3.6% and the Shanghai Composite Index (.SSEC) It fell more than 4%, also weighed down by fears of shrinking demand as well as frustration with so far tepid policy support.

The mid-range of internal currency trading in China was fixed at an eight-month low, and is seen as an official signal of the yuan’s recent decline, and the yuan sold to a one-year low of 6.5092 per dollar.

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Dalian iron ore fell more than 9%. Copper, the driver of economic growth, fell 1.6% and Brent crude futures fell 3.8% to a two-week low of $102.47 a barrel.

Meanwhile, palm oil jumped 6% and the Indonesian rupiah fell after a ban on exports from Indonesia added to global food price pressure.

The Dollar hit an 18-month high on Sterling at $1.2737, and reached two-month highs on the Kiwi at $0.6584 and the Australian Dollar at $0.7153.

The rising dollar pushed spot gold down 0.8% to $1,913 an ounce. Bitcoin is hovering just under $40,000.

The treasury market has stabilized. The benchmark 10-year yield was at 2.8738% while the 2-year yield was at 2.6488%, far from last week’s highs.

This week will also see the release of US growth data, European inflation numbers and the Bank of Japan policy meeting, which will be watched for any hints of a response to the sharp drop in the yen, which has lost 10% in about two months. .

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Reporting by Tom Westbrook. Editing by Edwina Gibbs

Our criteria: Thomson Reuters Trust Principles.