European stocks plunged while U.S. equity futures declined at the start of the week.
The Stoxx Europe 600 index managed to drop by 1.7% at the beginning of this week, which was the biggest decline in the last two months. The overall broad-based stock market retreat was mostly due to the iron ore’s extended slump under $100 per ton following China’s new restrictions on the industry’s activity. Apart from iron, base metals such as copper also dropped.
U.S. contracts also suffered after the S&P 500’s somewhat shaking. Hong Kong shares also dropped during the biggest property stock selloff of the year so far, as traders analyzed the risk of contagion from the Evergrande debt crisis that fuels new fears concerning China’s growth path. As a result, the offshore yuan also dropped.
Back in the U.S. financial markets are also facing uncertainty risks thanks to President Biden’s $4 trillion economic agenda and the U.S. debt ceiling suspension or raising efforts.
The problem of the debt ceiling also prompted professionals to take the stand. As Treasury Secretary Janet Yellen said, the U.S. government will most certainly run out of funds to cover all its bills by October if the issue of the debt ceiling remains resolved. She fears that an “economic catastrophe” will erupt unless lawmakers address the problem in time.
Professionals mentioned lately that the market is taking more time to price the stocks than expected and gives a more realistic picture as investors are starting to stay away from the buy-on-dip strategy due to the fear of inflation.
The current market state isn’t unfounded. As you may remember, it took 17 years for tech stocks to recover from the dot-com crash, and experts are rather uncertain where the market will go amidst these turbulent times where the pandemic often dictates the tempo.
