US stock, government bond and gold prices rose on Monday as investors battled concerns about a weakening global economy and looked forward to a busy week of corporate profits and statements by central bankers.
The stock index of US blue chips S&P 500 changed from gains to losses in thin trading before the end of the day almost exactly where it closed after the previous session. The technological Nasdaq Composite closed 0.1% lower. Shares in the S&P 500 are about 20% below the latest average, according to Bloomberg.
Gold, which typically rises during periods of uncertainty, rose 1.2 percent to $ 1998 an ounce in 1998, reaching its highest level in more than a month before falling back to $ 1977, an increase of 0.1%.
The broad MSCI stock market index in the Asia-Pacific region fell 1.1%, the second consecutive day of decline. Major European markets were closed for Easter Monday.
Government bonds were also vying for direction, with the 10-year US Treasury Department eventually gaining 0.03 percentage points to 2.86 percent. Profitability is moving back in price.
The cautious start to the trading week followed the release of a wave of economic data from China. Gross domestic product grew by 4.8% in the first three months of 2022 compared to the same period in 2021, exceeding market expectations.
But economic activity data for March revealed how Beijing’s policy of zero Covid, including the blockade of Shanghai, eroded the growth prospects of the world’s second-largest economy. Retail sales decreased by 3.5% in March compared to the same month in 2021, the first decline on an annual basis since July 2020; the annual growth rate of industrial production has slowed; and indicators tracking China’s troubled real estate market have deteriorated further.
“While March data show a significant slowdown in growth, with the escalation of zero Covid policy and growing disruptions in economic activity, resistance to economic activity is likely to be higher in April than in March,” analysts said. of JPMorgan.
JPMorgan has lowered its forecast for China’s GDP growth in 2022 from 4.9% to 4.6%. Barclays also lowered its growth forecast for 2022 from 4.5% to 4.3%.
The latest bout of concern over China has added to investors’ concerns about global central bank plans to tighten monetary policy in a bid to contain rampant inflation. In fact, natural gas prices in the United States rose 10 percent to $ 8.03 per metric million British thermal unit on Monday – the highest level since 2008.
Investors will be watching closely the speeches of Federal Reserve officials this week, including President Jay Powell, who may provide further guidance on how aggressively politicians will raise interest rates this year.
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Ian Hatzius, chief economist at Goldman Sachs, said over the weekend that the US Federal Reserve was facing a “difficult path to a soft landing” as it tried to cut inflation to its 2 percent target, from 8.5 percent, to sharply increased borrowing costs and reduced its balance sheet by $ 9 trillion.
Hacius sees a 15% chance that the United States will fall into recession next year and a 35% chance of doing so in the next 24 months.
Investors also mastered the latest batch of corporate results. Bank of America on Monday reported better-than-expected profits fueled by credit recovery and higher interest rates.
The first-quarter earnings season in the United States began on a decent basis, with companies in the S&P 500 reporting so far 7.5 percent higher than expected, according to FactSet.
However, less than a tenth of the companies in the blue chip index have updated the market and investors will have a better idea of the overall outlook by the end of this week, when another 67 components, including Netflix, IBM and American Express, will have reported results.
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