World stocks face losses in 2022
World stocks face losses in 2022. Even so, equities are on course for a 20% decline over a year marked by high inflation and war in Europe. The world stock market was stable, and US stock index futures pointed to a lower opening on Wall Street on the final trading day of 2022.
The dollar was expected to have its greatest yearly performance in seven years as a result of higher US interest rates. In response to supply chain problems, an energy crisis brought on by the Covid-19 epidemic, and the invasion of Ukraine by an oil producer, Russia, the Federal Reserve and other central banks have begun raising interest rates to combat inflation.
“This has been very much a Fed-driven equity market throughout the year,” said David Bizer, Managing Partner at investment manager Global Customised Wealth. “The market has been trying to anticipate when the Fed is going to hike, how fast and how far.”
After US markets rose 1-2.5% on Thursday, helped by news showing rising US jobless claims, S&P 500 futures declined by 0.3%. Data indicated that the Fed’s rate increases may be beginning to reduce demand for labour. The fed funds rate is currently between 4.25 and 4.5%, and according to the markets, it will peak around 5% in the middle of next year. Since March, the Fed has increased interest rates a total of 425 basis points.
The S&P 500 is anticipating a 19% decline, compared to the Dow Jones index’s 8.5% annual decline. Concerns over the expansion of the global economy were sparked by an increase of Covid-19 cases in China, which caused European markets to drop 0.6%, setting the stage for their worst annual performance since 2018. The FTSE 100 in Britain, which includes a number of exporters, decreased by 0.4%.
Although the largest MSCI index of Asian stocks outside of Japan increased by 0.5%, it is expected to end the year down by 19%, marking its worst year since 2008. The Nikkei in Japan was flat for the day but is down 11% for the year. The blue-chip CSI 300 Index in China up by 0.4% on the day but declined by 22% on the year, while the Hang Seng Index in Hong Kong increased by 0.2% on the day but decreased by 16% in 2022.
Chinese policymakers have promised to accelerate policy changes to mitigate the effects of an increase in Covid-19 infections on businesses and consumers. Since the beginning of the month, when China began to abandon its “zero-Covid” policy, the country has experienced tension due to an increase in instances; on Friday, Spain and Malaysia joined other countries.
The dollar index, which measures the greenback against six major currencies, fell 0.4% to a two-week low.
