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US Stock Markets Tumble Over Heightened Inflation Fears
11.07.2022

The price movement of the SNP500 has declined during this morning’s Asian and European sessions. The pre-market price has so far declined by 0.81% before this afternoon’s market open. Global stock markets have generally come under pressure due to a low risk appetite, triggered by the current European Gas uncertainty. European stocks have been falling and look certain to end the day on a minus. Traders will be looking towards the market reaction once the US stock market opens.

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Over the weekend, it became known that the world’s richest man, Elon Musk, is pulling out of a $44 billion deal to buy Twitter. The company has been failing to provide reports on the number of fake accounts on the platform, which have already been requested. In addition, the management of Twitter announced plans to cut up to 30% of its HR staff due to growing business problems. Company Chairman Bret Taylor said that management plans to legally enforce the merger agreement. The stocks of Twitter decreased by 4.01% so far.

Additional pressure on the US stock market is also exerted by the situation in the domestic bond market, the yield of which began to rise sharply again. The rate on the popular 10-year US Treasuries rose to 3.086% from 2.810%. The 20 and 30 year bonds have also significantly increased. The rise in bond yields indicates that once again the risk appetite of the market has dropped noticeably compared to the previous week where the stock market had increased in value.

Possible recession in the US economy, high interest rate hikes and high bond yields have resulted in decreased investor demand for risk-based assets of the stock market, which pushes the index quotes down.

The employment figures, which were released on Friday, had a mixed effect on the stock market. On the one hand, stronger employment figures may potentially improve the future economic outlook and investor demand. On the other hand, better employment figures provide more leeway for the Federal Reserve to increase interest rates further.

Currently, the best-performing stocks include: NetEase which increased by 2.67%, Tesla which increased by 2.54%, Regeneron Pharmaceuticals by 2.32% and Moderna Inc. by 2.22%. Twitter, Pinduoduo, PayPal Holdings, MercadoLibre, and JD.com stock are among the strongest declines.

Over the next week, investors will be monitoring the Consumer Price Index scheduled to be released this Wednesday and the Quarterly Earning figures for Pepsico, Morgan Stanley, and JP Morgan.

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