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Investors sold off across the board yesterday as they grappled with the economic fallout from soaring US interest rates and a slowdown in economic activity, as well as Europe’s most brutal military conflict since World War II and the resurgence of Covid-19 in China.
The FTSE All-World barometer of global equities fell 3 percent, the sharpest drop since June 2020. Wall Street’s blue-chip S&P 500 index lost 3.2 percent and the tech-heavy Nasdaq Composite lost 4.3 percent.
The energy sector was also swept up in the selling, with Brent crude, the international benchmark, falling nearly 6 percent as investors worried about the outlook for the global economy.
Yesterday, new data from China showed that export growth fell to its lowest level in two years in April. This was followed last week by weaker data from Germany and France, the EU’s two largest economies, which showed factory orders slowed more-than-expected in March.
The bond market sell-off also continued, with the US 10-year Treasury yield rising over 3.2 percent before falling back.
Bitcoin continued its steep fall. The world’s most actively traded digital token has fallen below $30,000 for the first time since July and is down more than 50 percent since its November peak.
Emerging market currencies have also come under pressure from the strengthening dollar and slowing economic activity in China. The Chinese renminbi fell to its weakest level in more than 18 months against the dollar yesterday.
But it looks like there could be a pause in selling today after Wall Street fell for five straight weeks — its worst losing streak since 2011.
Futures contracts tracking the S&P and Nasdaq 100 today pointed to a higher open on Wall Street. This comes after European stocks, which fell 2.9 percent yesterday, held steady in the morning session, while Hong Kong’s Hang Seng index pared early losses to move into positive territory in the afternoon session.
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Market knowledge: Richard Bernstein questions whether the current real fed funds rate will slow the economy, let alone dampen inflation.
Thank you for reading FirstFT Americas. Here’s the rest of the day’s news – Gordon
Five more stories in the news
1. The Fed warns that a sharp rise in interest rates poses a risk to the US economy A sharp rise in interest rates would pose a risk to the US economy, the US Federal Reserve said in its latest Financial Stability Report yesterday. The Federal Reserve also warned that job losses, higher interest rates and lower home prices could hurt consumer finances in the twice-yearly update.
2. Ukraine improves war aims as confidence grows Ukraine has upgraded its war aims and is trying to push Russian forces out of the country as long as western allies quickly deliver promised heavy weapons, Foreign Minister Dmytro Kuleba told the Financial Times.
3. The world is on track to surpass the 1.5 degree warming threshold within five years There is a 48 percent chance that the Earth’s annual temperature will exceed 1.5C of warming compared to pre-industrial levels in any of the years between now and 2026, the World Meteorological Organization and the UK Met Office said in a report released today.
4. Grindr goes public with Spac deal The gay dating app plans to go public through a merger with a special purpose vehicle, which would give it an implied valuation of $2.1 billion. Grindr will receive proceeds of $384 million in transaction with Tiga Acquisition, a Spac founded by Ashish Gupta in 2020.
5. Andy Warhol’s Marilyn Monroe painting sells in record-breaking fashion Andy Warhol’s iconic screenprint portrait of Marilyn Monroe, “Shot Sage Blue Marilyn,” sold for $195 million at Christie’s last night. The price was a record for a work by an American artist and the highest price ever paid for a 20th-century work of art.
Andy Warhol’s “Sage Shot Blue Marilyn” at Christie’s. The work was considered a trophy by collectors © Sarah Yenesel/EPA-EFE/Shutterstock
The day ahead
FT Future of Cars Summit Tesla CEO Elon Musk will attend the FT’s annual auto conference virtually today. He will speak and answer audience questions. Register here for a digital pass.
corporate profit Barry McCarthy will report his first quarterly results as chief executive of Peloton, the connected fitness company. Warner Music, Coinbase, Occidental Petroleum, Electronic Arts and Wynn Resorts are also reporting results.
monetary policy Raphael Bostic and Loretta Mester, Federal Reserve Chairmen in Atlanta and Cleveland respectively, will discuss monetary policy at the Atlanta Fed’s Financial Markets Conference in Florida. Minneapolis Fed President Neel Kashkari will attend a meeting with Fed Governor Christopher Waller in Minnesota. The President of the New York Fed, John Williams, will speak at an economic symposium in Germany.
Queen’s Speech Queen Elizabeth will miss the opening of Parliament for the first time in almost six decades. Her eldest son, Prince Charles, will read her the speech outlining the British government’s legislative program for next year.
Inauguration of the South Korean leader Debate over whether South Korea should use US nuclear weapons on the Korean peninsula — and whether it should even seek to develop its own nuclear deterrent — has dominated the run-up to today’s inauguration of Yoon Suk-yeol.
What else we read and hear
The creator of Bored Ape’s next stroke of luck The startup behind Bored Ape Yacht Club, the non-fungible tokenized digital art collection bought up by celebrities and crypto enthusiasts for millions of dollars, has an ambitious new idea: selling virtual properties in its own metaverse as Alternative to platforms built by Silicon Valley companies like Apple and Meta.
Henry Kissinger: “We are now living in a completely new era” The Cold War strategist discussed Russia, the Ukraine war and China at the FT Weekend Festival in Washington last weekend. Find out the full transcript of Kissinger’s interview with FT’s Edward Luce and watch it here.
New Zealand’s labor law will make waves beyond its shores Laws going through the New Zealand Parliament aim to improve bad jobs by setting minimum wages and working conditions. Sarah O’Connor says the law represents a huge change in the job market – and its success or failure will impact the world.
Money Clinic: How Can I Grow My Side Business? A year ago, 24-year-old Evvia opened a vintage knitwear shop from her bedroom. Today her label Loupy Studio has more than 40,000 followers on Instagram and she receives orders from all over the world. The business has been so successful that Evvia has had to cut back the hours she works in her day job – but she wonders how that might fit together financially. FT consumer editor Claer Barrett advises the budding entrepreneur.
The enduring fascination with the “power spouse” Movies and books often tell the stories of the rich and powerful. But their spouses can be just as fascinating, writes Emma Jacobs. How else to explain the newspaper soap operas that tell gossip about Meghan Markle and Carrie Johnson?
Something to see
Discover the best of TV and streaming this week, from hard-hitting French drama Oussekine to Our Father, a nightmarish tale of a doctor who played God, modern dating in Love Life and more.
Sayyid El Alami as Malik Ossekine © Jean-Claude Lother
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