Wall Street is ready to return, but the risk of recession keeps investors wary

Wall Street is ready to return, but the risk of recession keeps investors wary

LONDON, June 21 (Reuters) – Wall Street was scheduled to open on Tuesday on a rise, with European stocks set for a second day of growth, recovering slightly from last week’s lows of 17 months but major central bank plans to raise interest rates. rate and global recession risks have kept investors wary.

Global stocks have risen so far this week, recovering from last week’s sharp sell-off, which brought global stocks to their lowest level since November 2020 as expectations of tightening central bank policies to fight high inflation prompted investors to give up risky assets. .

At 11:10 GMT on Monday, the MSCI World Stock Index, which tracks stocks in 50 countries, rose 0.4% a day (.MIVD00000PUS).

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The European STOKSKS 600 increased by 0.8% (.STOKSKS), and the London FTSE 100 increased by 0.7% (.FTSE).

U.S. markets, which were closed on Monday due to the holidays, are expected to open on the rise, and the S&P 500 e-mini and Nasdaq futures rose 1.7 percent.

However, analysts expect the return to be short-lived. Timothy Graf, head of macro strategy for EMEA at State Street Global Markets, said the increase was likely the result of over-sales in recent weeks and relief from the risks of events such as the Bank of Japan and Swiss National Bank meetings.

“I think it’s a break in what is still a trend where you have a growing likelihood of slowing growth, high inflation – potentially stagflation – the outcome,” he said.

“Stock markets and earnings prospects for companies, I don’t think they really took that into account.”

Goldman Sachs said it now thinks there is a 30 percent chance that the U.S. economy will fall into recession over the next year, up from a previous 15 percent forecast. More

The German industry association BDI has lowered its economic forecast for 2022 and said a cut in Russian gas supplies would make a recession in Germany inevitable. More

Earlier in the session, Australian Reserve Bank Governor Philip Lowe hinted at further rate increases and said inflation was expected to reach 7% by the end of the year. More

Yields on European bonds rose, with a reference 10-year German yield of 12 basis points per day to 1.78%.

In the foreign exchange markets, the euro rose 0.4% to $ 1.05515, while the US dollar fell 0.2% on day 104.07.

The U.S. 10-year yield was 3.2844%, down from last week’s high of 3.495% – the highest since 2011 – which came on the same day the Fed raised interest rates by a whopping 75 basis points.

The Japanese yen, which has fallen sharply in recent months, has fallen further to $ 135.97 – the weakest yen since 1998.

Japanese Prime Minister Fumio Kishida said the central bank should maintain its current ultra-loose monetary policy. This makes it outstanding among other large central banks. More

Oil prices have risen as investors have focused on scarce crude oil and fuel supplies. Brent oil futures rose 1.1% to $ 115.38, while West Texas oil futures (VTI) rose 1.4% to $ 111.13. More

Gold changed slightly to about $ 1,832.6 an ounce.

Bitcoin rose about 3% that day to $ 21,173, stabilizing slightly as it fell to as much as $ 17,592.78 over the weekend. Cryptocurrencies are increasingly becoming a metric of risk appetite, said Graf of State Street.

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Reporting Elizabeth Haukroft; Editing: Louise Heavens and Chizu Nomiiama

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