Profitability might not be that fragile, at least, not yet.” “The economic impact of tightening remains a puzzle. “In the past few months, stock markets have been digesting that despite all of these predictions of imminent collapse in profits, a severe economic downturn has not materialised,” he said.įalling natural gas prices and a clearing of supply chain bottlenecks after Russia’s invasion of Ukraine is an overlooked development in capital markets, Gardiner added.

The chief concern for stocks is the expectation of pressured corporate profits, while bonds are sensitive to inflation and rate expectations. Stock and bond markets in the past weeks have been driven by different factors, said Kevin Gardiner, global investment strategist at Rothschild & Co.

Investor enthusiasm about the reopening of China’s economy after authorities dismantled strict Covid-19 controls in December has faded, as analysts look for more evidence to gauge the pace of recovery. MSCI’s broadest index of world shares dipped 0.2%, hovering near seven-week lows, while the Stoxx 600 index slid 0.3% and Wall Street’s S&P futures were down 0.6%. World stocks spluttered on Thursday, pressured by a pullback in Chinese stocks and higher US bond yields amid fears the Federal Reserve and European Central Bank (ECB) will keep raising interest rates to combat high inflation.Įuropean shares dropped to a one-month low as worse-than-expected eurozone inflation numbers justified what is widely expected to be another 50 basis-point hike in the ECB’s decade-high rates this month.Ĭonsumer price inflation in the 20 countries sharing the euro eased to 8.5% in February from 8.6% a month earlier on lower energy prices, but still expectations for 8.2% in a survey of economists.

Business slides