Stocks sink after bond markets indicate a tough future

Stocks sink after bond markets mention expectations of tough future

European stock markets slumped on Wednesday as bond markets predicted more pain for the US economy, dampening hopes for a negotiated resolution to the Ukraine crisis, which had previously boosted equities. 

Bond investors had gambled overnight that the US Federal Reserve’s aggressive tightening of policies would weaken the world’s largest economy in the long run. Frankfurt and Paris benchmark indexes fell 1% and 1.3 percent, with London shares dropping a smidgeon. 

After three sessions of advances, the broad Euro STOXX 600 index dipped 0.8 percent in early trade, returning to levels seen before Russia’s invasion of Ukraine. 

Roche, which lost 1.3 percent after a lung cancer medication failed to reach targets in a late-stage experiment, was among the big losers.

Bond market signals, according to market participants, were at odds with the sentiment in equities markets.

In Asia, stocks rose after Ukraine suggested neutral status on Tuesday, which was considered as a step in the right direction in face-to-face peace talks.

On the ground, however, reports of attacks persisted, and Ukraine viewed Russia’s vow to pull back military activities in negotiations with scepticism.

Outside of Japan, Asia-Pacific stocks surged 1.3 percent to their highest level in nearly a month, with most Asian stock indexes in positive territory.

Futures on the S&P 500 have turned negative, indicating a loss of around 0.3 percent. Rising US yields have an impact elsewhere, bringing Japanese government bond yields along with them, putting Japan’s ultra-loose monetary policy in jeopardy.

Last year, when oil and natural gas prices rose, global energy trader, Vitol Group achieved a record net profit of slightly over $4 billion. The unaudited number surpasses the company’s previous high-water mark of net profit set in 2020.

As oil prices recovered from their lows in 2020, Vitol’s earnings soared to $279 billion in 2021.

In a case of suspected competition law violations, India’s antitrust regulator raided the headquarters of tyre businesses, including Continental AG (CTTAY) of Germany and CEAT and Apollo Tyres of India.

CEAT shares plummeted 2.2 percent, while Apollo shares slid 3%.

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