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The world’s major stock indexes lost ground last week, the sixth consecutive week of losses and the longest such streak since the Panic of ’08, when the Great Recession hit America and much of the world.
Investors are beset by rampant worldwide inflation, rising interest rates, the Ukraine war and Western sanctions, and now the growing prospect of recessions in China, Europe, and the U.S.
London’s FTSE All-World Index slumped 2.2 percent last week. In the U.S., all three major stock indexes gave ground.
At one point last week, at least 4,100 U.S. stocks fell to 52-week lows, the largest number since the onset of the COVID War in March 2020.
The typical stock in the small-company Russell 3000 has lost 40 percent from its 52-week peak, according to Financial Times calculations.
Even the S&P’s financial subindex shed 3.6 percent. Investors are betting that any increase in bank profits through higher interest rates will be more than offset by an increase in the number of loans that go bad, the FT said.
Investors seeking safety took refuge in U.S. treasury securities, pushing yields on the benchmark 10-year note down two-tenths of a percentage point through the week.
Demand for the notes pushes prices up, which reduces yields.
TRENDPOST: Interest rates are rising around the world, with the European Central Bank finally preparing to nudge its rate up. (See related story in this issue.) Inflation will not be controlled any time soon. The damage done to global supply lines, production, and consumption by China’s lockdowns will take months to undo.
TREND FORECAST: The economies of China and the U.K. contracted last month, the first step toward recession. (See related stories in this issue.) A global recession is now far more likely than not.