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Stocks head for correction and bear markets as commodities gain

chart with bear and bull and red downward arrow

Asia markets are set to remain unsettled with reports that Russia is bombarding cities, despite offering escape routes in its conflict with Ukraine. Commodity prices are soaring, while global markets dived overnight.

SPI futures are pointing to a flat start at the open of the S&P/ASX 200, and the NZX 50 was down 0.6% in the first half hour of trading.

US and EU stocks

The Dow Jones Industrial Average lost nearly 800 points to close in correction territory, the Nasdaq dropped 3.6% to fall into a bear market and the S&P 500 was 3% lower by the close. Markets across Europe fell, the pan-European Stoxx 600 index down 1.1%, having lost 7% last week, its worst since the onset of the coronavirus pandemic in March 2020. The Euro Stoxx 50 and Germany’s DAX index also closed in bear markets.

Treasuries

The spread between US two-year and 10-year Treasuries briefly dropped below 20 basis points, a level not seen since March 2020 and a bearish sign for the economy. The US bond market’s 10-year inflation forecast jumped to a record 2.785%, while the yield on the benchmark Treasury bond rose 5 basis points at 1.78%.

Commodities

Gold reached its highest level since August 2020.

Crude oil hit levels not seen since 2008 on supply concerns in an already tight market, with the US considering banning Russian oil imports, even without Europe’s backing and Bloomberg is reporting that the EU is mapping out a plan to cut its reliance on Russian gas by almost 80% this year.

Currencies

A gauge of the dollar rose for a third day, trading at the highest since 2020. With a stronger US dollar the Australian dollar fell back below US74c.

Cryptocurrencies

Bitcoin was trading just above US$38,000 while Ethereum was at US$2500.


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