NEW YORK: The MSCI global stock index notched its biggest first-half of a year percentage drop on record yesterday, while the US benchmark S&P 500 had its steepest percentage drop for the first six months since 1970.
The MSCI global stock index was down 20.9% for the first half of 2022. Since the start of the year, the S&P 500 has lost 20.6%.
Behind the slides have been concerns over the Ukraine-Russia war, soaring inflation, higher interest rates and, more recently, a possible US recession.
Yields on the benchmark Treasury note are up about 150 basis points year-to-date, the largest first-half increase since the first six months of 1994.
Adding to jitters yesterday, a Commerce Department report showed US consumer spending rose less than expected in May. While the report suggested inflation had probably peaked, price pressures were still strong enough to leave the US Federal Reserve on its aggressive policy-tightening path.
“Inflation is not something that we don’t have to worry about anymore. It is expected to be with us for quite some time,” said Sam Stovall, chief investment strategist at CFRA in New York.
Central bank chiefs from the Fed, the European Central Bank and the Bank of England met in Portugal this week and voiced their renewed commitment to control inflation no matter what pain it caused.
Yesterday, world stock markets mostly sank on intensifying recession fears, while oil prices receded after an Opec decision to proceed with a limited boost to output.
On Wall Street, all three major US stock indices finished the month and the second quarter in negative territory, with the S&P 500 notching its steepest first-half percentage drop since 1970.
The Nasdaq had its largest-ever January-June percentage drop, while the Dow suffered its biggest first-half percentage plunge since 1962.
All three indices posted their second straight quarterly declines. The last time that happened was in 2015 for the S&P and the Dow, and 2016 for the Nasdaq.
The Dow Jones Industrial Average fell 253.88 points, or 0.82%, to 30,775.43, the S&P 500 lost 33.45 points, or 0.88%, to 3,785.38 and the Nasdaq Composite dropped 149.16 points, or 1.33%, to 11,028.74.
European shares yesterday marked their worst quarter since the pandemic-led selling of early 2020, as investors became increasingly wary of a global recession given hawkish central bank actions to try to tame inflation.
All the major sectors were in the red. Banks weighed the most, with a gauge of eurozone lenders sliding 3.3% to March lows after the ECB's top supervisor asked lenders to calculate recession risks.
The continent-wide Stoxx 600 index dropped 1.5%, chalking up quarterly losses of 10.7%. Miners were among the biggest drags in the quarter, down more than 20%. – Reuters
