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Title: Asian stocks fall to two-year low, euro nears par with dollar on growth fears

Jul 12, 2022 03:16AM ET

By: AnalysisWatch

Global stock markets slipped, oil prices fell and the euro approached parity with the safe-haven dollar on Tuesday as the prospect of further monetary tightening by central banks, renewed COVID outbreaks in China and energy shortages in Europe rattled investors.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.3% to its lowest level in two years, while Japan's Nikkei index lost 2%.

Futures also pointed to a trading week in the United States and Europe as the S&P 500 e-minis fell 0.6% in the United States, Nasdaq futures fell 0.7%, pan-regional Euro Stoxx 50 futures fell 0.8% and FTSE futures fell 0.44%.

The euro fell as low as $1.0005 against the US dollar, approaching parity for the first time since December 2002, as investors feared an energy crisis could plunge the region into recession.

The dollar index, which tracks the currency against six others, rose to 108.44, its highest level since October 2002.

Macro data will take centre stage this week, including US consumer inflation on Wednesday and comments from Federal Reserve officials, as investors look for clues on the outcome of the upcoming Fed meeting before officials enter the pre-meeting blackout period.

A high inflation reading would increase pressure on the Fed to increase its already aggressive pace of rate hikes.

Earlier in the afternoon, Hong Kong's Hang Seng Index fell 1.21% to its lowest level since 17 June, while China's benchmark CSI300 index lost 1.3%.

The yield on 10-year government bonds was at 2.9595% after falling back below 3% overnight as investors bought safe-haven government bonds in the face of the sell-off on Wall Street.

Growth fears also weighed on oil prices, despite concerns about tight supplies.

Brent crude futures fell $1.35, or 1.3 per cent, to $105.75 a barrel, while US West Texas Intermediate crude was $1.45, or 1.4 per cent, lower at $102.64 a barrel.

The price of gold was down slightly. The spot gold price was $ 1728.98 per ounce.

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