(Bloomberg) — A selloff on Wall Street went global as investors grappled with the threat of higher-for-longer interest rates, China’s sluggish economy and an Israeli counter-strike.
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The Stoxx Europe 600 Index sank 1.3%, echoing moves in Asian and US equities. After a historic advance at the start of year, investors have been warning that markets are overdue for a pullback. And with earnings season underway, there’s growing concern that the mega-cap leaders will struggle to justify their steep valuations.
US equity futures ticked lower on Tuesday in a sign of stability after S&P 500 fell more than 1% in two straight sessions. Bank of America Corp. and Johnson & Johnson are among companies set to report today.
“We had a phenomenal rally. If you look at positioning and sentiment indicators they were elevated,” Christian Mueller-Glissmann, the head of asset allocation at Goldman Sachs Group Inc., said in an interview on Bloomberg TV. “Investors were possibly squeezed a bit into the market, so you have a bit of a setback.”
“Earnings information so far has been a bit mixed with some of the Magnificent 7 being in focus, so it feels a bit shaky,” he added.
The dollar gained against all its G-10 peers as traders sought havens after top Israeli military officials reasserted that their country has no choice but to respond to Iran’s weekend drone and missile attack.
A slew of China’s economic data points showed that the nation’s economic rebound remains uneven. While both gross domestic product and fixed assets investment beat forecasts, data on retail sales and industrial output fell short of estimates.
The Japanese yen remained under pressure, after surging to a new 34-year low against the dollar overnight.
Brent crude held above $90 a barrel, and gold was steady.
Key events this week:
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Germany ZEW survey expectations, Tuesday
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US housing starts, industrial production, Tuesday
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Morgan Stanley, Bank of America earnings, Tuesday.
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Fed Vice Chair Philip Jefferson speaks, Tuesday
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BOE Governor Andrew Bailey speaks, Tuesday
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IMF publishes its latest world economic outlook, Tuesday
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Eurozone CPI, Wednesday
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Fed issues its Beige Book, Wednesday
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Cleveland Fed President Loretta Mester speaks, Wednesday
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Fed Governor Michelle Bowman speaks, Wednesday
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BOE Governor Andrew Bailey speaks, Wednesday
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Taiwan Semiconductor earnings, Thursday
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US Conf. Board leading index, existing home sales, initial jobless claims, Thursday
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Fed Governor Michelle Bowman speaks, Thursday
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New York Fed President John Williams speaks, Thursday
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Atlanta Fed President Raphael Bostic speaks, Thursday
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BOE Deputy Governor Dave Ramsden and ECB Governing Council member Joachim Nagel speak, Friday
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Chicago Fed President Austan Goolsbee speaks, Friday
Stocks
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The Stoxx Europe 600 fell 1.5% as of 9:33 a.m. London time
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S&P 500 futures were little changed
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Nasdaq 100 futures were little changed
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Futures on the Dow Jones Industrial Average fell 0.1%
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The MSCI Asia Pacific Index fell 2%
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The MSCI Emerging Markets Index fell 1.7%
Currencies
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The Bloomberg Dollar Spot Index rose 0.2%
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The euro fell 0.1% to $1.0613
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The Japanese yen fell 0.2% to 154.52 per dollar
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The offshore yuan fell 0.2% to 7.2721 per dollar
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The British pound was little changed at $1.2444
Cryptocurrencies
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Bitcoin rose 0.4% to $63,431.79
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Ether rose 0.5% to $3,098.7
Bonds
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The yield on 10-year Treasuries advanced three basis points to 4.63%
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Germany’s 10-year yield was little changed at 2.44%
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Britain’s 10-year yield advanced two basis points to 4.26%
Commodities
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Brent crude fell 0.1% to $90.29 a barrel
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Spot gold fell 0.5% to $2,370.57 an ounce
This story was produced with the assistance of Bloomberg Automation.
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