A broker looks at financial information on computer screens at the IG index, the trading floor in London, Britain February 6, 2018. REUTERS/Simon Dawson

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  • Stocks fall as global recession fears rise
  • Beijing risks being confined
  • Macron’s election wins short-lived relief for euro
  • Oil drops back to $100 a barrel
  • Chart: Overall Asset Performance

LONDON, April 25 (Reuters) – Traders dumped riskier assets on Monday as relief over Emmanuel Macron’s victory in the French presidential election quickly gave way to fresh worries about the global economy and the global economy. impact on it of the rise in interest rates.

Asian markets suffered their worst session in more than a month overnight as fears that Beijing could soon be back in lockdown sent Chinese stocks back to 2020 lows, and as the effects of Wall Street’s 2.5% drop on Friday persisted. .

The bashing immediately continued in Europe. The STOXX 600 index (.STOXX) fell to its lowest since mid-March, led by the 2% and 1.9% declines in French (.FCHI) and German (.GDAXI) stocks. The euro slipped 0.7% to its lowest level since the first episode of the COVID-19 panic in March 2020.

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“The reality is that there is more to the story of the French elections than Macron’s victory yesterday,” said Rabobank FX strategist Jane Foley.

Not only are legislative elections still to come in France in June, but Macron also appears to be keeping up the pressure for a Europe-wide ban on Russian oil and gas imports, which would cause serious economic hardship, at least in the short term. term.

“German officials said last week that if there was an immediate embargo on Russian energy, it would cause a recession in Germany. And if there was a recession in Germany, it would cause the rest of Europe down and would have repercussions for the rest of the world,” Foley said.

MSCI’s broadest global equity index slid 0.7% to a six-week low. Oil fell more than 4% in commodity markets and concerns over Beijing sent the Chinese yuan to its lowest level in a year.

Chinese state television reported that residents were ordered not to leave Beijing’s Chaoyang district on Monday after a few dozen COVID cases were detected over the weekend. Read more

The China-sensitive Australian dollar fell 1.2% while the US dollar climbed smoothly to a two-year high, hitting $1.0707 against the euro and 1.2750 against the British pound .

The focus is on how quickly and how much the Federal Reserve will raise US interest rates this year and whether that, along with all other global concerns, will tip the global economy into recession.

This week is also busy for corporate earnings. Nearly 180 companies in the S&P 500 index are due to report. Big American tech will be the highlight, with Microsoft and Google both on Tuesday, Facebook on Wednesday, and Apple and Amazon on Thursday.

In Europe, 134 of the Stoxx 600 will also report, including banks HSBC, UBS and Santander on Tuesday, Credit Suisse on Wednesday, Barclays on Thursday and NatWest and Spain’s BBVA on Friday.

“I wonder if just meeting expectations will be enough, I feel like we may need a little more,” said Rob Carnell, ING’s Asia chief economist, referring to concerns about big tech following a disastrous report from Netflix last week.

“It’s advice about the future that will be as important as anything and I suspect most of these companies are going to come out and say it all looks pretty uncertain, which I don’t think is really going to help.”

Global stocks suffer one of worst start to year ever

FEAR FACTOR

US markets fell on Friday, when the Dow Jones (.DJI) had its worst day since October 2020 and the CBOE Volatility Index (.VIX), dubbed Wall Street’s “fear gauge”, jumped higher high.

“Rate and recession concerns are now the biggest risks for investors,” with a particular focus on demand, said Candace Browning, head of global research at Bank of America.

“Soaring food and gasoline prices, along with the end of major stimulus programs, have investors worried about the spending capacity of low-income consumers.”

Monday’s sell-off in Asia also saw Hong Kong’s Hang Seng (.HSI) fall 3.7% and the Shanghai Composite (.SSEC) fall nearly 5%.

China’s central bank had set the midpoint of the yuan’s trading band at an eight-month low, seen as an official nod to the currency’s recent slide, and the yuan sold off at a 1-year low of 6.5092 to the dollar.

Metals were also mutilated. Dalian iron ore fell more than 9%. Copper, an indicator of economic growth, fell 1.6% and Brent futures fell 4.5% to a two-week low of $101.78 a barrel.

Palm oil, meanwhile, jumped 6% and the Indonesian rupiah fell following an export ban from Indonesia that is further adding to global pressure on food prices.

The rising dollar sent spot gold down 0.8% to $1,913 an ounce. Bitcoin was hovering just below $40,000.

Bond markets have at least stabilized. The benchmark 10-year yield was at 2.8738% while Germany’s 10-year yield, the benchmark for Europe, was down 9 basis points to 0.87%. France’s 10-year yield also fell about 9 basis points to 1.34%.

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

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Additional reporting by Tom Westbrook Marc Jones; edited by John Stonestreet

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