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Global markets took on a tentative tone on Monday as investors struggled to gauge the impact of the weekend’s shortlived armed revolt in Russia and continued to contemplate a general weakening economic outlook.
Wall Street’s benchmark S&P 500 was down 0.2 per cent by mid-afternoon, while the tech-heavy Nasdaq Composite ceded 0.7 per cent.
The moves echoed declines elsewhere, with the pan-European Stoxx 600 falling 0.1 per cent, dragged down by a sell-off in the defence sector.
Crude was the asset most directly affected by the weekend’s drama when Russian warlord Yevgeny Prigozhin and his Wagner paramilitary forces briefly staged a revolt against the country’s leader Vladimir Putin.
Traders said the mutiny raised serious questions over the outlook for Putin’s regime, but the immediate impact on crude output from one of the world’s top suppliers remained uncertain.
Brent crude and West Texas Intermediate rose about 0.5 per cent to $74.25 and $69.48 a barrel, respectively.
“There’s a possibility of supply disruption any time you get a serious geopolitical event in a major oil supplier,” said Stephen Innes, managing partner at SPI Asset Management. “It opens up a can of worms and we’re going to have to see how that plays out.”
Gold also gained, rising 0.1 per cent to $1,923.27 a troy ounce as investors turned to haven assets. In Moscow, the rouble weakened, falling to a 15-month low of 87 to the dollar.
Monday’s stock market weakness extended the mood from Friday, when the FTSE All-World index registered its worst weekly performance since March as investors grew concerned that central banks’ monetary tightening could lead to recessions.
US Federal Reserve chair Jay Powell last week signalled that two more quarter-point rate increases were likely by the end of 2023 when he appeared before Congressional committees. Investors will use inflation data due on Friday to help gauge the likely timing of any further tightening.
Germany’s Dax ended 0.1 per cent lower on Monday after a closely watched survey showed that business confidence in Europe’s largest economy declined for the second successive month in June, hitting its lowest level since the end of 2022.
Elsewhere, the Turkish lira touched a record low, weakening about 3 per cent to TL26.04 against the dollar after the central bank loosened regulations aimed at keeping customers from holding dollar deposits.
Shares in the country’s banks, however, rallied on the news, sending the Bist Banks index to its highest level since December 2022. The central bank on Sunday reduced the amount of Turkish lira-denominated assets that lenders needed to hold against foreign currency deposits.
Equity markets in Asia kicked off the weak mood, with Japan’s Topix closing down 0.2 per cent, Hong Kong’s Hang Seng off 0.5 per cent and China’s CSI 300 shedding 1.4 per cent.
Australia’s S&P/ASX 200 index fell 0.3 per cent after analysts at Goldman Sachs downgraded the country’s equities to underweight because of dimming prospects for Chinese economic growth.
In currency markets, China’s renminbi dropped as much as 0.8 per cent to a seven-month low before ticking up slightly to Rmb7.236 to the dollar, as the country’s markets returned from a long holiday and concerns grew over domestic economic growth.
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