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by Emma Mitchell on July 5, 2022

Stocks in the green, yields in the red, as we enter the second half of the year

S&P 500 is regaining momentum after dropping below 3,700 points in mid-June. The benchmark stock index S&P 500 saw a 1% rise on Friday. Entering the 4th of July holiday in the green, the index closed at $3,825.33. The Dow Jones also followed suit, posting a gain of 1% as well, totaling a gain of 321.83 points. The Dow reached 31,097.26, with McDonald’s leading the charge at 2.5%.

NASDAQ Composite also saw gains of 0.9%, a move of 99.11 basis points, closing at 11,127.84

Coming off the back of a steep decline, the MSCI world index saw a modest 0.4% gain on Friday.

As fears of a looming global recession and supply chain disruptions take hold, copper drops to its lowest in over a year. Investors are wary that a likely recession will drop the demand for copper, with the London Metal Exchange seeing three-month copper dropping to as low as $7,955.

STOXX 600 index lost a negligible 0.02% on Friday.

Oil prices are on the rise with shutdowns expected across Norway

US crude gained 2.5% per barrel, reaching $108.43. Brent crude futures also rose around 2.4% to $111.63.

Libya was also hit with supply outages, contributing to the aforementioned price increases. This was coming off a decline of 9% throughout June, marking the first drop in price for the prior 8 months, due to interest rate hikes and additional Covid-19 lockdowns in China.

Slowing manufacturing output across the board for the Eurozone and the US

With inflation figures at record highs, the manufacturing output has taken a hit, with production falling across the eurozone for the first time since the start of the Covid-19 pandemic.

The US also saw a reduction in its manufacturing activity, which fell for the first time in the past two months, due to the Federal Reserve’s aggressive stance on raising interest rates to tackle inflation. The lowered output has investors worried about the pressure on manufacturing stocks and their guidance going forward.

The US dollar gains some ground as the global economic outlook turns pessimistic

The dollar index climbed closer to the 20-year high of 105.79, reaching 105.12 on Friday. Investors have been rushing to the usual reserve currency amid market pessimism. On the other side of the spectrum, Bitcoin has been in freefall. The price fell further 2% on Friday to $19,494.40.

The AUD fell to its lowest point since June 2020 at 67.64 cents.

Yields tumble amid interest rate hikes

The 10-year note yields dropped 2.889% – a drop of 8.5 basis points. The two-year treasury notes also dropped 2.839%. The rising interest rates lowered yields for both notes to their lowest points over the past month. This news is coming after the core personal consumption expenditures index rose 4.7% in May.

Inflationary scares are taking their toll on the global markets. Some analysts expect the recession to hit somewhere in 2023. In the meantime, it is safe to expect the Federal Reserve to keep increasing interest rates until inflation targets are reached.

By Emma Mitchell

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