Gold prices climbed and US stocks slid on Monday as concerns about a weakening global economy were heightened by signs that the coronavirus lockdown had dimmed growth prospects in China.
The yellow metal, which is usually bullish in times of uncertainty, rose about 0.8 percent to $1,989 an ounce, hitting its highest level in more than a month.
US stocks fell on Monday, with the blue-chip S&P 500 index falling 0.3% in afternoon trade, while the Nasdaq Composite fell 0.6% in sparse trade as markets reopened. from the long weekend. According to Bloomberg data, trading volume for stocks in the S&P 500 is about 20% below recent averages.
The broad MSCI index of stock markets in the Asia-Pacific region fell 1.1%, its second consecutive day of decline. Major markets in Europe were closed for the Easter Monday holiday.
In the government bond market, 10-year Treasury yields rose 0.06 percentage points to 2.87 percent. Output is inversely proportional to price.
Cautious start to the trading week after China releases a bunch of economic data. Gross domestic product increased by 4.8% in the first three months of 2022 compared to the same period in 2021, beating market expectations.
But economic activity data for March revealed how Beijing’s zero Covid policy, including Shanghai lockdown, has eroded the growth prospects of the world’s second-largest economy. Retail sales fell 3.5% in March compared with the same month of 2021, a year-on-year decline since July 2020; the annual growth rate of industrial production slowed down; and indexes tracking China’s struggling property market continued to deteriorate.
Although the March data showed a notable slowdown in growth momentum, coupled with an escalation in the zero-Covid policy and growing disruptions to business activity, the JPMorgan analysts said: economic activity, drag on economic activity is likely to be greater in April than in March,” JPMorgan analysts said.
JPMorgan cuts forecast for Of China GDP growth in 2022 from 4.9% to 4.6%. Barclays also cut its 2022 growth estimate from 4.5% to 4.3%.
The latest concerns about China have added to investor anxiety over plans by global central banks to tighten monetary policy in an effort to rein in raging inflation. In fact, the price of US natural gas jumped 10% to $8.03 per UK thermal power unit on Monday – the highest level since 2008.
Investors will be closely watching speeches by Federal Reserve officials, including chairman Jay Powell, which this week could offer further guidance on where policymakers are How strong will rate hikes be this year?
Jan Hatzius, chief economist at Goldman Sachs, said over the weekend that the central bank faces a “hard path to a soft landing” as it try to push the inflation rate down to the 2% target, from 8.5%, by dramatically increasing borrowing costs and reducing the size of its $9 billion balance sheet.
Hatzius sees a 15% chance the US will slip into a recession next year and a 35% chance of doing so in the next 24 months.
Investors also took a look at the company’s latest batch of results. Bank of America on Monday reported better than expected income boosted by a recovery in lending and higher interest rates.
First-quarter earnings season in the U.S. got off to a pretty steady start, with companies in the S&P 500 so far reporting earnings that were 7.5% higher than estimates, according to FactSet.
However, less than a tenth of the companies in the blue-chip index have updated the market so far, and investors will have a better picture of the overall outlook later this week, when 67 more are added. Companies including Netflix, IBM and American Express will report results.
