Stocks Struggle as Dimmer Growth Outlook Saps Mood: Markets Wrap
- Mixed big-tech earnings sparked selloff in U.S. shares
- Euro touched lowest since 2017 on fallout of Ukraine war
Most Asian stocks fell Wednesday as mixed corporate earnings, China’s Covid challenges and the prospect of aggressive Federal Reserve monetary tightening pointed to a deteriorating economic outlook.
Japan dragged an Asia-Pacific share gauge to the lowest since 2020 after U.S. shares slid Tuesday, hurt by a technology-sector selloff. S&P 500 and Nasdaq 100 futures stabilized, while European contracts dipped.
China’s bourses bucked the downbeat Asian trend, carving out a gain after President Xi Jinping vowed more infrastructure projects — the latest step to support a lockdown-hit economy. The Covid outbreaks in Shanghai and Beijing also showed tentative signs of steadying.
Prevailing risk aversion supported the dollar, which was around the highest level in nearly two years. Treasuries retreated but the benchmark 10-year yield, at about 2.77%, remains lower for the week.
The euro touched the weakest level versus the greenback since 2017 amid worries that Moscow may choke gas flows to Europe, hurting the region’s growth in the ongoing fallout from Russia’s invasion of Ukraine.
Russia will cut off supplies to Poland and Bulgaria Wednesday, making good on a threat to halt flows to nations that refuse to pay for the fuel in rubles. Oil held at $101 a barrel, with Europe mulling curbs on Russian crude.
The energy brinkmanship, along with disappointment over earnings from the likes of Alphabet Inc. and Texas Instruments Inc., sowed further doubts about the outlook for markets. The mood was already fragile due to Fed tightening to quell runaway inflation and slowing activity in China as Covid lockdowns bite.
“We know that sentiment is in a terrible state right now,” Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets LLC, said on Bloomberg Television. “This is a market that’s very, very confused. There’s just a real lack of conviction in anything people want to buy at this moment in time.”
Gains in Microsoft Corp. in extended U.S. trading on better-than-expected results alleviated some of the gloom. Among European firms, Credit Suisse Group AG reported a second-straight quarterly loss, while Deutsche Bank AG beat some estimates.
Elsewhere, Australia’s dollar rallied after core inflation breached the top of the central bank’s 2%-3% target for the first time since 2010. Swaps traders fully priced in a 15-basis-point hike for next month’s policy meeting.
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