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Markets

World stocks clamber off 18-month lows, but markets on recession watch

 

  • S&P futures up 1.13%, European stocks gain 0.96%
  • MSCI Asia ex-Japan +1.8%, Nikkei +2.64%
  • Worries over inflation, tightening policy remain
  • Dollar hovers near 20-year highs on safe-haven demand

LONDON/SHANGHAI, May 13 (Reuters) – World stocks rose from the previous day’s 18-month lows and the dollar pulled back from 20-year highs on Friday, though investors remained nervous about high inflation and the impact of rising interest rates.

Markets are becoming anxious about the possibility of recession, with the S&P getting close to a bear market on Thursday, at nearly 20% off its January all-time high.

In an interview late on Thursday, US Federal Reserve Chair Jerome Powell said the battle to control inflation would “include some pain.” Powell repeated his expectation of half-percentage-point interest rate rises at each of the Fed’s next two policy meetings, while pleading that “we’re prepared to do more.” read more

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The war in Ukraine has aggravated supply chain disruptions and inflationary pressures already in place after more than two years of the COVID-19 pandemic, but stocks enjoyed a bounce on Friday.

“There’s an awful lot of negative sentiment out there, we’re looking at a 40% chance of recession,” said Patrick Spencer, vice chairman of equities at Baird Investment Bank.

“A lot of fund managers have cut their equity allocations and raised cash, though we think this is a correction rather than a bear market.”

MSCI’s world equity index (.MIWD00000PUS) rose 0.32% after hitting its lowest since November 2020 on Thursday, though it was heading for a 4% fall on the week, its sixth straight week of losses.

S&P futures bounced 1.13% after the S&P index dropped 0.13% overnight, with the index also eyeing a sixth straight week of declines.

S&P 500 set for a sixth straight week of falls

European stocks (.STOXX) rallied 0.96% and Britain’s FTSE 100 (.FTSE) gained 1.17%.

The US dollar eased 0.22% to 104.54 against a basket of currencies, but remained close to 20-year highs due to safe haven demand.

Russia has bristled over Finland’s plan to apply for NATO membership, with Sweden potentially following suit.

Moscow called Finland’s announcement hostile and threatened retaliation, including unspecified “military-technical” measures. read more

The dollar rose 0.36% to 128.76 yen , while the euro gained 0.3% to $1.0408, recovering from Thursday’s five-year lows.

Cryptocurrency bitcoin also turned higher, cracking through $30,000 after the collapse of TerraUSD, a so-called stablecoin, drove it to a 16-month low of around $25,400 on Thursday. read more

“Some traders may see the sharp fall this month as an opportunity to buy the dip, but given the hugely volatile nature of the coins, the crypto house of cards could tumble further,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown .

The moves higher in equities were mirrored in US Treasuries, with the benchmark US 10-year yield edging up to 2.9221% from a close of 2.817% on Thursday.

The policy-sensitive 2-year yield was at 2.6006%, up from a close of 2.522%.

“Within the shape of the US Treasury curve we are not seeing any particularly fresh recession/slowdown signal, just the same consistent marked slowing earmarked for H2 2023,” Alan Ruskin, macro strategist at Deutsche Bank, said in a note.

German 10-year government bond yields edged up to 0.9250%.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was up almost 2% from Thursday’s 22-month closing low, trimming its losses for the week to less than 3%.

Australian shares (.AXJO) gained 1.93%, while Japan’s Nikkei stock index (.N225) jumped 2.64%.

In China, the blue-chip CSI300 index (.CSI300) was up 0.75% and Hong Kong’s Hang Seng (.HSI) rose 2.71%, encouraged by comments from Shangahi’s deputy mayor that the city may be able to start easing some tough COVID restrictions this month. read more

“We had some pretty big moves yesterday, and when you see those big moves it’s only natural to get some retracement, especially since it’s Friday heading into the weekend. There’s not really a new narrative that’s come through,” said Matt Simpson, senior market analyst at City Index.

Oil prices were higher against the backdrop of a pending European Union ban on Russian oil, but were still set for their first weekly loss in three weeks, hit by concerns about inflation and China’s lockdowns slowing global growth.

US crude rose 0.75% to $106.97 a barrel, and global benchmark Brent crude was up 1.05% at $108.58 per barrel.

Spot gold , which had been driven to a three-month low by the soaring dollar, was up 0.2% at $1,824.61 per ounce.

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Reporting by Andrew Galbraith; Editing by Simon Cameron-Moore, Lincoln Feast and Kim Coghill

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Categories
Business

Stocks in a tailspin, dollar soars as hard landing fears grow

A broker reacts while trading at his computer terminal at a stock brokerage firm in Mumbai, India, February 1, 2020. REUTERS/Francis Mascarenhas

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  • World stocks drop to 1-1/2 yr low, down almost 20% YTD
  • Europe opens down 2% US equity futures struggle
  • Dollar hits 2yr highs on AUD, NZD
  • Bitcoin tumbling, hits new 16-month low
  • Copper buckles to lowest since October

LONDON, May 12 (Reuters) – Shares sank to a 1-1/2 year low on Thursday and the dollar hit its highest in two decades, as fears grew that fast-rising inflation will drive a sharp rise in interest rates that brings the global economy to a standstill.

Those nerves and the still-escalating war in Ukraine took Europe’s main markets down more than 2% in early trade and left MSCI’s top index of world shares (.MIWD00000PUS) at its lowest since late 2020 and down nearly 20% for the year.

The global growth-sensitive Australian and New Zealand dollars fell about 0.8% to almost two-year lows. The Chinese yuan slid to a 19-month trough while the dollar powered to its highest level since late 2002.

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Nearly all the main volatility gauges were signaling danger. Bitcoin was caught in the fire-sale of risky crypto assets as it fell another 8% to $26,570, having been near $40,000 just a week ago and almost $70,000 just last November.

“We have had big moves,” UBS’s UK Chief Investment Officer Caroline Simmons, said referring as well to bond markets and economic expectations. “And when the market falls it does tend to fall quite fast.”

Data on Wednesday had shown US inflation running persistently hot. Headline consumer prices rose 8.3% in April year-on-year, fractionally slower than the 8.5% pace of March, but still above economists’ forecasts for 8.1%. read more

US markets had whipsawed after the news, closing sharply lower, and futures prices were pointing to another round of 0.2%-0.7% falls for the S&P 500, Nasdaq and Dow Jones Industrial later.

“We’re now very much embedded with at least two further (US) hikes of 50 basis points on the agenda,” said Damian Rooney, director of institutional sales at Argonaut in Perth.

“I think we were probably delusional six months ago with the rise of US equities on hopes and prayers and the madness of the meme stocks,” he added.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 2.3% to a 22-month low overnight. Japan’s Nikkei (.N225) fell 1.8%.

Treasuries were bid in both Europe and Asia, especially at the long end, flattening the yield curve as investors braced for near-term hikes to hurt long-run growth – an outcome that would most likely slow or even reverse rate hikes.

The benchmark 10-year Treasury yield had dropped in the US and fell a further 7 bps to 2.8569% on Thursday. The gap between the highly rate-rise sensitive two-year yields and 10-year ones narrowed 4.2 bps .

In Europe, Germany’s 10-year yield, the benchmark for the bloc, fell as much as 12 bps to 0.875%, its lowest in nearly two weeks.

“I think a lot of it is catch up from what happened yesterday, and also there’s still a lot of negative sentiment in the US Treasury curve,” said Lyn Graham-Taylor, senior rates strategist at Rabobank.

SELL IN MAY

The rates outlook is driving up the US dollar and taking the heaviest toll on riskier assets that shot up through two years of stimulus and low-rate lending.

The Nasdaq (.IXIC) is down nearly 8% in May so far and more than 25% this year. Hong Kong’s Hang Seng Tech index (.HSTECH) slid 1.5% on Thursday and is off more than 30% this year.

Cryptocurrency markets are also melting down, with the collapse of the so-called TerraUSD stablecoin highlighting the turmoil as well as the selling in bitcoin and next-biggest-crypto, ether. read more

A weakening growth picture outside the United States is battering investor confidence, too, as war in Ukraine threatens an energy crisis in Europe and lengthening COVID-19 lockdowns in China throw another spanner into supply chain chaos.

Nomura estimated this week that 41 Chinese cities are in full or partial lockdowns, making up 30% of the country’s GDP.

Heavyweight property developer Sunac (1918.HK) said it missed a bond interest payment and will miss more as China’s real estate sector remains in the grip of a credit crunch. read more

The yuan fell to a 19-month low of 6.7631 and has dropped almost 6% in under a month.

The Australian dollar fell 0.8% to a near two-year low of $0.6879. The kiwi slid by a similar margin to $0.6240, though the euro and yen held steady to keep the dollar index just shy of a two-decade peak.

Sterling was at a two-year low of just under $1.22 as well as economic data there caused worries and concerns grew that Britain’s Brexit deal with the EU was in danger of unraveling again due to the same old problem of Northern Ireland’s border. read more

In commodity trade, oil wound back a bit of Wednesday’s surge on growth worries.

Brent crude futures fell 2.3% to $104.93 a barrel, while highly growth-sensitive metals copper and tin slumped over 3.5% and 9% respectively. That marked copper’s lowest level since October.

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Additional reporting by Tom Westbrook in Singapore; Editing by Kim Coghill

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Categories
Business

Shares drop, yields shoot up after US inflation data

MILAN, May 11 (Reuters) – World shares turned lower on Wednesday and bond yields shot up after US data showed inflation there slowed down less than expected last month, cementing expectations of aggressive rate hikes by the Federal Reserve.

US futures turned negative after data showed US annual consumer price growth slowed to 8.3% in April from 8.5% in March, suggesting that inflation has probably peaked. The number, however, was above the 8.1% analyst had expected.

Paolo Zanghieri, senior economist at Generali Investments, said the data confirmed the view that the return of inflation to more tolerable values ​​will take time.

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“Overall today’s data add to the case of the strong front-loading called for by (|Fed Chair Jerome) Powell in the last meeting, who also suggested the possibility of two more 50bps rise in June and July,” Zanghieri said. “However, this will keep concern about the possibility of a recession high, and ultimately weakening growth may lead the Fed to temper it tightening after the summer.”

MSCI’s benchmark for global stocks (.MIWD00000PUS) was flat by 1247 GMT, having earlier risen as much as 0.3%. On Tuesday, the index fell to its lowest level since November 2020 on fears Fed tightening could significantly slow down the global economy.

US equity futures turned sharply negative, with the Nasdaq and S&P 500 e-minis down 1% and 0.6% respectively. The pan-European STOXX 600 (.STOXX) equity benchmark index also trimmed gains, and was last up 0.2%.

Money markets ramped up bets of Fed rate hikes by end-2022 to 208 basis points after the US inflation numbers, compared to around 195 bps before.

Earlier in Asia, equities squeezed higher from near two-year lows. Chinese blue chips (.CSI300) rose 1.4% after Shanghai officials said half the city had achieved “zero COVID” status, and after US President Joe Biden said he was considering eliminating Trump era tariffs on China.

Chinese data released on Wednesday, however, showed consumer prices rose 2.1% from a year earlier, more than expected and at the fastest pace in five months, partly due to food prices.

YIELDS SHOOT UP

After falling to their lowest levels in almost a week earlier on Wednesday, benchmark 10-year Treasury yields turned positive after the inflation data, marching back towards the three-year high of 3.203% hit on Monday.

The 10-year yield was last up 6 basis points on the day to 3.0502%, while the 2-year yield , which often reflects the Fed rate outlook, jumped 11 bps to 2.717%.

Euro area government bond yields also sold off following the US data, sending German 10-year yields up 8 bps to 1.084% .

Bets on aggressive Fed tightening have also supported the dollar this year.

The dollar index, which measures its performance against six main peers, reversed earlier weakness and was last up 0.1% to 104.04, closer to the two-decade high of 104.19 reached at the start of the week.

The Fed last week raised interest rates by 50 basis points and Chair Jerome Powell said two more such hikes were likely at the upcoming policy meetings.

There has also been speculation in markets the US central bank will need to move by 75 basis points at one meeting and currently money markets are pricing over 190 basis points of combined rate hikes per year.

“The current problem is that the market is convinced that the Fed is determined to fight inflation and therefore willing to tolerate market volatility and some demand destruction more than in the past. Personally, I’m less convinced of this determination,” said Giuseppe Sersale , fund manager at Anthilia.

Morgan Stanley forecasts 2022 global economic growth to be less than half of last year’s at 2.9%, down from a previous estimate of 3.2%. read more The US bank also cut its year-end target for the S&P 500 by 11% to 3,900 points, while raising its US 10-year yield forecast by 55 bps to 3.15%.

Oil bounced back, buoyed by supply concerns as the European Union works on gaining support for a ban on Russian oil.

Brent rose 2.6% to $105.12 a barrel and US crude rose 3% to $102.77.

Spot gold dipped 0.1% to $1,836.2 an ounce.

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Reporting by Danilo Masoni in Milan, Sujata Rao in London and Alun John in Hong Kong, Editing by William Maclean and Tomasz Janowski

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Categories
Economy

Why are food prices going up? Key questions answered

Elena Rodriguez cuts vegetables in the soup kitchen where she works in Pamplona Alta, a low-income neighborhood on the outskirts of the Peruvian capital where soaring food prices are placing animal proteins out of reach for the most vulnerable residents, in Lima, Peru April 11 , 2022. REUTERS/Daniel Becerril

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CHICAGO, May 10 (Reuters) – Why are food prices rising?

Global food prices started to rise in mid-2020 when businesses shut down due to the COVID-19 pandemic, straining supply chains. Farmers dumped out milk and let fruits and vegetables rot due to a lack of available truckers to transport goods to supermarkets, where prices spiked as consumers stockpiled food. A shortage of migrant labor as lockdowns restricted movement impacted crops worldwide.

Since then, there have been problems with key crops in many parts of the world. Brazil, the world’s top soybean exporter, suffered from severe drought in 2021. China’s wheat crop has been among the worst ever this year. Concerns about food security, heightened during the pandemic, have led some countries to hoard staples to ward off future shortages, limiting supplies on the global market.

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Russia’s invasion of Ukraine in late February dramatically worsened the outlook for food prices. The UN food agency said prices hit an all-time record in February and again in March. Russia and Ukraine account for nearly a third of global wheat and barley, and two-thirds of the world’s export of sunflower oil used for cooking. Ukraine is the world’s No. 4 corn exporter. The conflict has damaged Ukraine’s ports and agricultural infrastructure and that is likely to limit the country’s agricultural production for years.

Some buyers are avoiding buying grains from Russia due to Western sanctions.

Indonesia banned most exports of palm oil in late April to ensure domestic supplies of cooking oil, cutting off supplies from the world’s largest producer of the edible oil used in everything from cakes to margarine. read more

What food prices are rising the most?

Throughout the pandemic, high vegetable oil prices have helped drive up broader food costs. Cereal prices also hit a record in March, a result of limited shipments of corn and wheat during the Ukraine war. read more

Dairy and meat prices reached a record in April, according to the UN food agency, reflecting continually increasing global demand for protein and high prices for animal feed – mainly corn and soybeans. In addition, bird flu in Europe and North America impacted egg and poultry prices. read more

In US inflation data for March, the index for meats, poultry, fish and eggs increased 14% from a year ago while beef rose 16%.

When will food prices come down?

It is hard to say, given that agricultural production depends on hard-to-predict factors like weather. UN Secretary-General Antonio Guterres said in early May the problem of global food security could not be solved without restoring Ukrainian agricultural production and Russian food and fertilizer output to the world market. read more

The World Bank forecasts wheat prices could rise more than 40% in 2022. The Bank expects agricultural prices to fall in 2023 versus 2022. But that depends on increased crop supplies from Argentina, Brazil and the United States – by no means guaranteed.

The sharp rise in fertilizer prices, as avoid buying from major producers Russia and its ally Belarus, could discourage countries farmers from applying adequate crop nutrients to their fields. That could bring down yields and result in lower production, prolonging the crisis. As the climate warms, extreme weather is becoming more common – posing another risk to crop production. read more

Who is most affected?

Food prices in March accounted for the greatest share of US inflation since 1981, according to Fitch Ratings, while shop prices in Britain emerged in April at the fastest rate in more than a decade. But the people most impacted by higher food prices live in the developing world, where a larger percentage of incomes is spent on food.

The Global Network Against Food Crises, set up by the United Nations and the European Union, said in an annual report that Russia’s invasion of Ukraine poses serious risks to global food security, especially in countries facing a food crisis including Afghanistan, Ethiopia, Haiti, Somalia, South Sudan, Syria and Yemen. read more

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Reporting by Caroline Stauffer in Chicago Editing by Matthew Lewis

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Categories
Business

Musk says he would reverse Twitter ban on Donald Trump

May 10 (Reuters) – Billionaire Elon Musk said on Tuesday he would reverse Twitter’s ban on former US President Donald Trump when he buys the social media platform, the clearest signal yet of Musk’s intention to cut moderation of the site.

Musk, the world’s richest person and chief executive of electric vehicle maker Tesla Inc (TSLA.O), has inked a $44 billion deal to buy Twitter Inc (TWTR.N). He has called himself a “free speech absolutist,” but given few specific details of his plans.

Musk is expected to become Twitter’s temporary CEO after closing the deal, Reuters previously reported, citing a source familiar with the matter. read more

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The question of reinstating Trump has been seen as a litmus test of how far Musk will go in making changes, even though Trump himself has said he would not return.

Twitter, like other US-based social media platforms, has banned various individuals for violating its policies on misinformation and glorification of violence.

Musk, speaking to a Financial Times conference, added that he and Twitter co-founder Jack Dorsey believe permanent bans should be “extremely rare” and reserved for accounts that operate bots or spread spam.

“Wrong and bad” tweets should be deleted or made invisible and a temporary account suspension could be appropriate, Musk said. “I think permabans just fundamentally undermine trust in Twitter as a town square where everyone can voice their opinion.”

Musk said the decision to ban Trump amplified Trump’s views among people on the political right, and he called the ban “morally wrong and flat-out stupid.”

The suspension of Trump’s account, which had more than 88 million followers, silenced his primary megaphone days before the end of his term and followed years of debate about how social media companies should moderate the accounts of powerful global leaders.

Trump was permanently suspended from Twitter shortly after the Jan. 6, 2021, attack on the US Capitol. Twitter cited “the risk of further incitement of violence” in its decision.

Megan Squire, a senior fellow for data analytics at the Southern Poverty Law Center, said a permanent ban from mainstream networks, or de-platforming, has been a successful tactic in reducing the reach of abusive messaging and behaviors.

Musk has endorsed some limits, telling a European Union official on Monday that EU policy was “exactly aligned” with his own thinking on controlling illegal content. read more

‘THOUGH TO BE EVERYWHERE’

Conservatives, who have accused San Francisco-based Twitter of bias against right-leaning views, have cheered the prospect of Trump’s return to the platform.

Trump “ought to be everywhere he can,” Republican Senator Rick Scott told reporters when asked about Musk’s comments. “We shouldn’t have social media companies that are restricting people’s ability to get their message out.”

Senator Roy Blunt, an establishment Republican who is retiring, was one of several Republicans who said they had no opinion about the possibility of Trump’s returning to Twitter.

“But I suspect that’s a good business decision on (Musk’s) part,” Blount said with a smile.

Democrats have said Trump’s potential reinstatement could constitute a threat to democracy, although some hope Trump could upset their base and rev up turnout in the November midterm elections, with Democrats facing tough challenges in retaining their majority in both houses of Congress.

Twitter declined to comment.

Trump previously told Fox News that he would not return to Twitter if allowed. read more His own social media app, Truth Social, launched on the Apple app store in late February.

Trump has revved up his messaging on the new platform after a slow start, posting about 50 times, mostly in the last week, to his 2.7 million followers. He averaged 18 tweets a day when he was president.

There was no immediate comment from a Trump spokesperson.

White House press secretary Jen Psaki said on Tuesday that Twitter’s ban on Trump was a matter for the company to decide. The Biden administration wants online platforms to protect freedom of speech but also ensure they are not forums for disinformation, she said.

During the conference, Musk said the deal to acquire Twitter could be done in two to three months in the “best-case scenario.”

Earlier on Tuesday, Twitter shares fell to a level that indicated the stock market believed it was unlikely Musk would make the acquisition for $44 billion, as he originally agreed. read more

Musk’s decision to buy Twitter has concerned some Tesla investors and put pressure on Tesla’s stock. Musk on Tuesday added that he would stay at Tesla “as long as I can be useful.”

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Reporting by Sheila Dang in Dallas; additional reporting by Alexandra Ulmer, David Morgan, Eva Mathews, Jeff Mason, Nandita Bose, Greg Roumeliotis, Katie Paul and Peter Henderson Editing by Nick Zieminski and Leslie Adler

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Categories
Economy

Ukraine to halt key Russian gas transit to Europe, blames Moscow

Gas pipelines are pictured at the Atamanskaya compressor station, facility of Gazprom’s Power Of Siberia project outside the far eastern town of Svobodny, in Amur region, Russia November 29, 2019. REUTERS/Maxim Shemetov.

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KYIV/LONDON, May 10 (Reuters) – Ukraine said on Tuesday it would suspend the flow of gas through a transit point which it said delivers almost a third of the fuel piped from Russia to Europe through Ukraine, blaming Moscow for the move and saying it would move the flows elsewhere.

Ukraine has remained a major transit route for Russian gas to Europe even after Moscow’s invasion.

GTSOU, which operates Ukraine’s gas system, said it would stop shipments via the Sokhranivka route from Wednesday, declaring “force majeure”, a clause invoked when a business is hit by something beyond its control.

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But Gazprom (GAZP.MM), which has a monopoly on Russian gas exports by pipeline, said it was “technologically impossible” to shift all volumes to the Sudzha interconnection point further west, as GTSOU proposed.

GTSOU CEO Sergiy Makogon told Reuters that Russian occupying forces had started taking gas transiting through Ukraine and sending it to two Russia-backed separatist regions in the country’s east. He did not cite evidence.

The company said it could not operate at the Novopskov gas compressor station due to “the interference of the occupying forces in technical processes”, adding it could temporarily shift the affected flow to the Sudzha physical interconnection point located in territory controlled by Ukraine.

Ukraine’s suspension of Russian natural gas flows through the Sokhranivka route should not have an impact on the domestic Ukrainian market, state energy firm Naftogaz head Yuriy Vitrenko told Reuters.

The state gas company in Moldova, a small nation on Ukraine’s western border, said it had not received any notice from GTSOU or Gazprom that supplies would be interrupted.

The Novopskov compressor station in the Luhansk region of eastern Ukraine has been occupied by Russian forces and separatist fighters since soon after Moscow began what it describes as a “special military operation” in February. read more

It is the first compressor in the Ukraine gas transit system in the Luhansk region, the transit route for around 32.6 million cubic meters of gas a day, or a third of the Russian gas which is piped to Europe through Ukraine, GTSOU said.

GTSOU said that in order to fulfill its “transit obligations to European partners in full” it would “temporarily transfer unavailable capacity” to the Sudzha interconnection point.

Gazprom said it had received notification from Ukraine that the country would stop the transit of gas to Europe via the Sokhranivka interconnector from 0700 local time on Wednesday.

The Russian company said it saw no proof of force majeure or obstacles to continuing as before. Gazprom added that it was meeting all obligations to buyers of gas in Europe.

The United States has urged countries to lessen their dependence on Russian energy and has banned Russian oil and other energy imports in retaliation for the invasion of Ukraine.

US State Department spokesperson Ned Price said Tuesday’s announcement does not change the timeline to lessen global dependence on Russian oil “as soon as possible.”

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Reporting by Susanna Twidale and Pavel Polityuk; additional reporting by Nina Chestney in London, Daphne Psaledakis in Washington and and David Ljunggren in Ottawa; Editing by Alexander Smith, Cynthia Osterman and Rosalba O’Brien

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Categories
Business

Wall Street dips while treasury yields, oil prices drop

NEW YORK, May 10 (Reuters) – Wall Street stocks turned lower in a volatile session and oil prices fell on Tuesday with risk appetite appearing to falter as investors turned to safe havens such as Treasuries amid fears about inflation and slowing economic growth.

US Treasuries rallied, with the yield on the benchmark 10-year note tumbling from more than a three-year high to below 3% as the market reassessed the inflation outlook a day before US consumer price index (CPI) data is released.

Markets have been volatile due to a combination of surging inflation and fears that monetary tightening aimed at slowing price increases would also cause a slowdown in economic growth.

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Last week central banks in the United States, Britain and Australia raised interest rates and investors girded for more tightening as policymakers fought soaring inflation.

While all three US indexes were rebounding from Monday’s sell-off, enthusiasm for equities quickly faded.

“There’s a tonne of cross currents right now. Liquidity is drying up and volatility is the name of the game,” said Matthew Miskin, co-chief investment strategist at John Hancock Investment Management in Boston.

“The tech and growth side of the (equities) market is such a big weight. Treasury yields going up as fast as they did spooked risk assets. If they could take a breather here it could let the market … find some footing. “

Miskin was reassured by Federal Reserve official comments on Tuesday that suggested efforts to engineer a soft landing. In particular he pointed to Cleveland Federal Reserve Bank President Loretta Mester’s comment that while unemployment may increase and growth slow, the Fed’s policy tightening should not push the economy into a “sustained downturn.” read more

“They’ve been so hawkish so any slight move off that the market wants to sniff that out,” said Miskin. “Sentiment wise a lot of people are looking for capitulation. The dots aren’t completely connecting yet for that.”

At 1130 EDT (1530 GMT), the Dow Jones Industrial Average (.DJI) fell 97.45 points, or 0.3%, to 32,148.25, the S&P 500 (.SPX) lost 10.91 points, or 0.27%, to 3,980.33 and the Nasdaq Composite ( .IXIC) dropped 16.49 points, or 0.14%, to 11,606.76.

The pan-European STOXX 600 index (.STOXX) rose 0.80% and MSCI’s gauge of stocks across the globe (.MIWD00000PUS) shed 0.33%, after earlier rising as much as 1.44%.

The US dollar was choppy on Tuesday as it held near a two-decade high ahead of a key reading on inflation that could provide insight on the Fed policy path. read more

The dollar index rose 0.164%, with the euro down 0.19% to $1.0535. The Japanese yen weakened 0.03% versus the greenback at 130.29 per dollar, while Sterling was last trading at $1.2301, down 0.24% on the day.

Earlier data showed China’s export growth slowed to its weakest in almost two years, as the central bank pledged to step up support for the slowing economy. read more

Oil prices fell in volatile trade as the market balanced impending European Union sanctions on Russian oil with demand concerns related to coronavirus lockdowns in China, a strong dollar and growing recession risks.

US crude recently fell 1.85% to $101.18 per barrel and Brent was at $103.92, down 1.91% on the day.

Benchmark 10-year notes last rose 33/32 in price to yield 2.9497%, from 3.079% late on Monday.

Spot gold dropped 0.4% to $1,847.41 an ounce. US gold futures % to $1,857.10 an ounce.

Elsewhere, Bitcoin was up 4% after earlier falling to its lowest level since July 2021. Tuesday’s gain allowed it to recover some losses when it tumbled 11.8% on Monday plunge, which had been its biggest daily fall since May 2021 . read more

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Additional reporting by Herbert Lash and Chuck Mikolajczak in New York, Elizabeth Howcroft in London; Editing by Bradley Perrett, Raissa Kasolowsky and Alexander Smith

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