Europe
European stocks started the week on a negative note as investors assessed risks from the Covid-19 outbreak in China, a tight race for the French presidency, rising bond yields, and military actions in Ukraine.
The Stoxx50 Europe index declined by 0.3% as of 11:20 a.m. in London. Tech stocks fell while banks outperformed rising bond yields.
The first round of elections in France gave President Emmanuel Macron a slight edge over Marine Le Pen.
According to Mathieu Rachet, head of the equity strategy at Julius Baer, "the risks to French assets if Le Pen wins have also diminished compared to 2017, as she no longer argues for a 'Frexit' and the likelihood of her party winning a majority in the June legislative elections is slim."
London
JPMorgan Chase & Co reports that UK large-cap stocks offer investors one of the best protection against rising bond yields, especially, if hikes become steeper.
UK stocks appear to be cheaper than other developed markets' shares and also offer one of the highest dividend yields in the world.
The FTSE 100 index fell by 0.5% at 10:15 a.m. in London, but remains down by 3.4% year-to-date, compared with a more than 6% drop in the MSCI World Index. The UK index benefited from its high exposure to commodity stocks, which rose this year amid supply problems, and so-called price stocks, which benefited from rising bond yields.
United States
US stocks and bonds fell on Monday as political and economic risks weighed on sentiment. The US dollar index changed slightly, while the euro rose against the US dollar.
US futures fell, pointing to new problems for global stocks after the Federal Reserve last week signaled a sharp interest-rate hike and balance sheet cuts to curb price pressures.
Twitter Inc. fell in the premarket trading after Elon Musk decided not to join the board of the social media platform.
Chinese stocks also fell amid a Covid outbreak across the mainland
The hawkish Fed policy, commodity market disruptions caused by the military operation in Ukraine, and the prospect of an economic slowdown continue to shape the market sentiment. Covid restrictions in China threaten to exacerbate supply chain disruption and a further increase in inflation risks. Investors await quarterly earnings reports this month to restore confidence in the outlook for stocks.
Meanwhile, German Foreign Minister Annalena Baerbock said Ukraine would need more military support, including heavy weapons, as it has reported Russian missile attacks. The minister said she expected Russia to expand its offensive in the eastern part of the country this week.
Austrian Chancellor Karl Nehammer said he would meet with President Vladimir Putin in Moscow on Monday, while the new commander of Russian troops on the ground has alarmed US officials.
Key events of this week:
- Earnings season begins, including statements from Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Taiwan Semiconductor Manufacturing, Wells Fargo
- Chicago Federal Reserve Bank President Charles Evans speaks on Monday
- EU foreign ministers meet, more measures against Russia are on the agenda, Monday
- US Consumer Price Index, Tuesday
- OPEC monthly oil market report, Tuesday
- Fed Governor Lael Brainard, Richmond Fed President Thomas Barkin speak on Tuesday
- Bank of Canada rate decision, Wednesday
- EIA crude oil inventory report, Wednesday
- Reserve Bank of New Zealand rate decision, Wednesday
- China trade, medium-term credit lines, Wednesday
- ECB rate decision, Thursday
- Bank of Korea policy decision, Thursday
- US retail sales, initial jobless claims, business inventories, University of Michigan consumer sentiment, Thursday
- Cleveland Fed President Loretta Mester, Philadelphia Fed President Patrick Harker speak on Thursday
- US stock and bond markets are closed due to Good Friday
