- Global stocks fell on Tuesday as US futures retreated from the hot rally the day before.
- Snap fell up to 28% before opening after its CEO warned of a “challenging macroeconomic environment”.
- The euro rose after European Central Bank (ECB) president Christine Lagarde said rates in the eurozone were at a “tipping point”.
Global stocks fell Tuesday with US futures retreating from the hot rally of the previous day as investors continued to panic over a recession.
Meanwhile, the euro rebounded against the dollar after European Central Bank (ECB) president Christine Lagarde said rates in the eurozone were at a “tipping point”.
S&P 500 futures fell 1.03% after soaring Monday as investors digested the results of their first-quarter earnings season, while Dow Jones Futures fell 0.66%. Tech-focused Nasdaq futures fell 1.62%, lowering all major US indices as Snap shares plunged after a late earnings warning on Monday.
Investor fears over a slowdown in the economy fueled Snap’s CEO warning of a “challenging macroeconomic environment” that will hit the social media platform’s employment and revenue growth for the rest of the year. After his remarks, the stock plunged 28% in the reload market on Tuesday.
“Snap terrified the market with the biggest blow to the technology,” said Neil Wilson, chief market analyst at Markets.com, pointing to a earnings correction that could hold the market down for a longer period of time. “The company has recently announced that it will delay hiring, as well as warning that it will miss its sales and earnings estimates.”
Global stocks fell as MSCI All-World fell 0.34% as concerns about growth continued.
Europe’s Stoxx 600 fell 0.72% and the UK’s FTSE 100 fell 0.20%. Preliminary Purchasing Managers Index data showed that Germany’s DAX fell 0.82% and France’s CAC 40 fell 0.92%, as eurozone business growth slowed in May due to raw material shortages.
ECB President Lagarde stressed on Tuesday that the central bank is at a “tipping point” in monetary policy, but there is no need to rush to raise interest rates or withdraw economic support. Her comments, based on her prediction that the ECB will raise interest rates this year, helped push the euro to a one-month high against the dollar.
“Based on economic data from the eurozone, there is no reason why the ECB shouldn’t start the process of raising rates,” said Naeem Aslam, chief market analyst. Avaad said.
Asian shares closed lower as China’s new economic support measures failed to alleviate concerns about the impact of Beijing’s COVID-zero policy of stringent containment to contain the virus. The Shanghai Composite Index fell 2.41% and the Hong Kong Hang Seng Index fell 1.75%. Japan’s Nikkei 225 Index fell 0.94%.
Oil futures fell during the US summer driving season as concerns about deregulation in China and prospects for a global recession outweigh expectations of a recovery in demand and continued tight supply. Brent crude fell 0.13% to $113.27 and WTI crude was down 0.14% to $110.15.