Markets cut inflation expectations as copper dips By Reuters

Written by Caroline Cohn and Tom Westbrook

LONDON/SINGAPORE (Reuters) – Global stocks and benchmark US bonds headed for their first weekly gain in a month on Friday, as economic growth fears were allayed by the view that lower commodity prices and other commodities could curb runaway inflation.

The week was marked by a sharp drop in commodity prices on concern that the global economy looks shaky and that higher interest rates will hurt growth – which in turn is prompting traders to lower inflation expectations and trim some bets on the size of the rallies.

“Inflation will remain high and above target, but it is increasingly likely that it will start to peak over the next few months,” said Andrew Hardy, investment director at Momentum Global Investment Management.

“Markets can take that reasonably well – there is potential for a recovery later in the year.”

Copper, a leader in economic production with a wide range of industrial and construction uses, is headed for its biggest weekly decline since March 2020. It fell in London and Shanghai on Friday and fell more than 7% on the week.

Tin fell 9.7 percent to $ 24,380 a ton, its lowest since March 2021, and is on track for a weekly percentage decline of about 22 percent, its largest ever decline.

Futures are down more than 3% for the week at $109.70 a barrel and 10% for the month, while benchmark grain prices are down, with Chicago wheat down more than 8% this week. [O/R][GRA/]

Gold rose 0.29% to $1,828.50 an ounce, but was headed for its second consecutive weekly decline.

The declines provided some relief for stocks as energy and food were the drivers of inflation. After recent heavy losses, the MSCI global stock index is up 0.3% on the day and 2.4% this week, making it its first weekly gain since May.

The US rose 0.7% after Wall Street’s major indexes posted solid gains on Thursday. [.N]

European shares rose 0.82%, on track for small weekly gains. It rose 0.73%, also showing a slight increase during the week.

“While market concerns about a sudden slowdown are behind recent moves in lower raw material prices, lower commodity prices feel they may be just what the doctor ordered for the global economy,” said Brian Dangerfield, markets strategist at Nat West.

“A lot of our deepest concerns are related to commodity price concerns.”

US Central Bank President Jerome Powell told lawmakers Thursday that the Federal Reserve’s commitment to curbing 40-year high inflation was “unconditional,” while acknowledging that sharply higher interest rates could drive up unemployment.

Germany is heading for gas shortages if Russian gas supplies remain as low as they are now due to the conflict in Ukraine, and some industries will have to shut down if there is not enough in the winter, Economy Minister Robert Habeck told Der Spiegel on Tuesday. Friday.

German business sentiment fell more than expected in June.

Bonds rose strongly on hopes of trimming bets on big rate hikes, with German two-year bond yields dropping 26 basis points on Thursday in their biggest drop since 2008.

The German 10-year yield fell 4 basis points on Friday after falling 29 basis points on Thursday, and is heading for its first weekly decline since mid-May. [GVD/EUR]

The index settled at 3.0666% after falling 7 basis points on Thursday and [US/]

Bond funds suffered their biggest outflows since April 2020 in the week ending Wednesday while stocks lost $16.8 billion as markets were stuck in an extreme downward position, Bank of America’s weekly analysis of outflows showed on Friday.

The US dollar has fallen from last week’s 20-year high. It settled at $1.0529 per euro and fell 0.2% to 134.67 yen. [FRX/]

The faltering yen stabilized this week and drew little support on Friday from Japanese inflation that exceeded the Bank of Japan’s 2% target for the second month in a row, adding to pressure on its ultra-easy stance on policy.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.1%, buoyed by the rescue of short sellers from Ali Baba (NYSE 🙂 – up nearly 6% – amid hints that China’s crackdown on technology is ebbing.

It rose 1.2% to post a weekly gain of 2%.