Stocks fell Friday after their worst quarter since the pandemic bear market, buffeted by economic risks from tightening Federal Reserve monetary policy and Russia’s war in Ukraine.
Hong Kong equities led Asia lower, including a tumble in Chinese technology firms. Trading in at least 33 Hong Kong-listed stocks was halted because of missed deadlines for reporting annual results.
China’s bourses struggled amid the nation’s worst Covid outbreak since the pandemic’s early days. Japan dipped as companies took a gloomier view of business conditions, with yen weakness threatening higher expenses. U.S. and European equity futures were subdued.
Oil held losses on the move by the U.S. to release roughly a million barrels a day from reserves to tackle rising energy costs. Russia’s invasion has disrupted commodity flows, fanning prices for everything from fuel to food.
Treasuries dipped and the curve between two-year and 10-year yields remained close to inverting, a pattern that signals worries about an economic downturn if the Fed uses aggressive interest-rate hikes to damp high inflation.
Investors begin a new quarter wondering if the fighting in Ukraine, the isolation of Russia and the Fed’s increasingly hawkish turn will engender still more volatility and further losses for stocks and bonds. Raw materials are the only key asset class to deliver major gains so far in 2022.
Downgraded growth outlooks in the U.S., Europe and China are “something to watch very carefully,” Anwiti Bahuguna, head of multi-asset strategy at Columbia Threadneedle Investments, said on Bloomberg Television. “There are very few places to hide these days in the multi-asset space,” though commodities are a good spot because of inflation and geopolitics, she added.
U.S. data showed the personal consumption expenditures price index — which the Fed uses for its inflation target — increased 6.4%, the most since 1982.
In Europe, talks between Ukraine and Russia are set to resume Friday. President Vladimir Putin said Russia aims to keep supplying gas to European customers even as it demands they shift to payment in rubles.
The Russian government has so far stayed current on its debt obligations. JPMorgan Chase & Co. Thursday processed a nearly $447 million payment for dollar debt due in 2030. Another deadline is approaching on April 4.