Global stocks mostly fell on Monday after a short-lived armed insurrection in Russia added to uncertainty over the war in Ukraine.
France’s CAC 40 fell 0.4% in early trade, to 7,135.23. Germany’s DAX fell 0.2%, to 15,797.27. Britain’s FTSE 100 fell 0.8% to 7403.10. Dow Jones Industrial Average futures and S&P 500 futures fell 0.2%.
A mutiny of mercenary soldiers who briefly captured a Russian military headquarters ended in an ill-fated march towards Moscow. But the memorandum weakened President Vladimir Putin at a time when his forces were facing a fierce counteroffensive in Ukraine.
Yevgeny Prigozhin and his Wagner troops were among the most effective fighters for Russia in Ukraine. Their aborted takeover of the capital also left their fate unknown.
Such geopolitical uncertainties have led to a cautious mood, said Tim Waterer, senior market analyst at KCM Trade.
“On the back of recent central bank hawkish moves amid high inflation and low growth environments, investors now also have to factor in the opportunity for escalation on the geopolitical side of things, which adds another layer of uncertainty to the equation,” he said.
Investors were also alarmed by signs that the European economy is looking weaker than expected and by higher interest rates by central banks as they try to control inflation. Higher rates lower inflation by slowing economic activity, which increases recession risks.
In Asian trading, Japan’s Nikkei 225 lost nearly 0.3% to end at 32,698.81. South Korea’s Kospi index rose 0.5 percent to 2,582.20. Hong Kong’s Hang Seng fell 0.5% to 18,794.13, while the Shanghai Composite, which reopened after a holiday, fell 1.5% to 3,150.62. Australia’s S&P/ASX 200 fell 0.3% to 7,078.70.
“We have a slowing US economy, a slowing global economy, all with persistent hyperinflation and high and rising levels of interest rates. There is no bullish scenario for the stock market here,” said Clifford Bennett, chief economist at ACC Securities.
High interest rates in the United States have already dragged manufacturing and other industries into deflation, while also helping to cause many failures in the banking system that have shaken confidence. Federal Reserve Chairman Jerome Powell said last week that although his central bank did not raise interest rates last week, it could still go ahead with two more hikes by the end of this year.
A preliminary report last week indicated continued growth in the US economy in general, despite contracting manufacturing and falling production to a five-month low.
In energy trading, the price of US crude rose 11 cents to $69.27 a barrel in electronic trading on the New York Mercantile Exchange. It fell 35 cents to $69.16 on Friday. Brent crude, the international benchmark, rose 15 cents to $74.16 a barrel.
In currency trading, the US dollar fell to 143.14 yen from 143.58 yen. The price of the euro reached $1.0898, down slightly from $1.0903.