Global financial markets were mixed on Monday, with US government bond prices falling ahead of this week’s Federal Reserve monetary policy meeting, and European shares surging on hopes of talks between Russia and Ukraine.
The yield on US 10-year Treasuries, which moves inversely to the benchmark government debt guarantee rate and sets the tone for borrowing costs worldwide, rose 0.04 percentage point to 2.05 percent, the highest level since mid-February.
In stock markets, the Stoxx Europe 600 stock index, which has fallen more than a tenth so far this year as investors become increasingly concerned about sanctions against Russia that are choking commodity supplies and causing a recession, added 0.5 percent.
Elsewhere, however, shares in China have fallen on signs that widespread shutdowns could once again become commonplace as the world’s second-largest economic deals with the biggest outbreak of Covid-19 since the pandemic began two years ago.
At its meeting on March 16-17, the Federal Reserve is widely expected to raise the key funds rate by at least a quarter of a point, after holding it near zero since the start of the Corona virus crisis two years ago, in a move that may affect others. Central banks raise borrowing costs despite economic risks of Ukraine war.
Consumer price inflation in the United States rose to an annual rate of 7.9 percent in February, its highest level in 40 years, while price hikes also set a record in the euro area and are expected to exceed 7 per cent in the UK this spring.
Chairman Jay Powell indicated that the US Federal Reserve will start raising interest rates by 25 [basis point] Analysts at research house Javikal said in a note to clients.
“However, a 50 basis point rise cannot be ruled out as inflation and inflation expectations continue to rise.”
Hong Kong’s Hang Seng Index plunged 5.3 per cent and China’s CSI 300 Index plunged 3.1 per cent after putting 17.5 million Shenzhen residents under lockdown. Contains an increase in cases From the coronavirus variant omicron.
The measures followed similar ones in Changchun, a city of 9 million in northeastern China, with cases also rising in Shanghai and a number of other major cities.
China reported more than 1,800 cases of Covid-19 on Sunday, the most daily cases in two years, as authorities struggled to contain the disease. The largest outbreak in the country Since the emergence of the Corona virus in Wuhan in the year 2020.
“If the lockdown is extended, China’s economic growth will be significantly affected,” said Raymond Young, chief economist for Greater China at ANZ. “Half of China’s GDP and its population will be affected this time,” Young added, and that a one-week shutdown of the affected area could cut about 0.1 percentage point of the country’s economic growth this year.
The Hang Seng Tech index of big Chinese technology stocks is down more than 11 percent.
Oil standards have also fallen back on the hope that Russia will be more willing to engage in serious negotiations with Ukraine.
“If you compare the positions of the two delegations in the talks at the beginning and now, there has been significant progress,” said Leonid Slutsky, one of the Russian negotiators, in an interview with RT Arabic, a Russian state-owned news channel.
Brent crude, the international benchmark, fell 3.3 percent to $109 a barrel, and US West Texas Intermediate crude fell 3.6 percent to $105 after signs of movement in the talks.
“Oil prices continue to show volatility on the back of additional uncertain supplies from outside Russia, as well as continued geopolitical risks from the war,” said Kushal Ramesh, senior analyst at Rystad Energy.
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