April 17, 2024

MSCI Global Stock Index Records Biggest First Half Drop

On Thursday, the MSCI index of global shares recorded its biggest drop in the first half of a year in its history. Meanwhile, the benchmark US S&P 500 index also notched its biggest percentage drop for the first half since 1970.

Different concerns

There have been a number of concerns that have contributed to this slide, which include soaring inflation, the Russia-Ukraine conflict, the aggressive rise in interest rates, and more recently, the possibility of an economic recession.

There is an increase of about 150 basis points in yields on the US Treasury benchmark notes year-to-date, which is the biggest increase recorded in the first half since 1994. A report from the Commerce Department added to jitters on Thursday, when it showed that consumer spending had grown less than expected in May.

Even though the report indicated that inflation may have finally reached its peak, the prices were still high enough to have the US Federal Reserve reiterated that they would continue on their monetary policy tightening path. Market analysts said that inflation is expected to stay for quite a while now.

This week, the chiefs of different central banks, including the Bank of England, the European Central Bank, and the US Federal Reserve met at the annual conference in Portugal. All of them expressed their commitment to controlling inflation, regardless of the consequences.

Market performance

Since the beginning of the year, the benchmark US index, the S&P 500, has declined by more than 20%, which means it has entered into a bear market. There was also a 1.5% drop in the continent-wide European STOXX 600 index and a 1.12% decline in the MSCI index of global shares was also noted.

The first half of the year saw the MSCI global share index lose about 20.9%. The US dollar has seen a great deal of support this year, primarily because of the desire of investors for liquidity in tough economic times and the hawkish stance of the US Federal Reserve.

There was a 6.5% gain in the US dollar index for the second quarter, which was the biggest quarterly increase seen since the final quarter of 2016. There is a 9.4% rise in the index for the year to date. There was a 0.343% fall in the dollar index on Thursday, with a 0.01% drop in the euro, which left it at $1.0481. There was a 5.92% decline in Bitcoin that brought it to $18,904.06.

Oil prices

There was a 3% drop in oil prices on Thursday. OPEC+ said that the output increase in August would be what they had announced previously, but investors were left concerned about output in the future. There was a 3% decline in Brent crude futures scheduled for delivery in September, which brought the price to $109.03 per barrel.

On Thursday, the August contract will expire and it fell by 1.3%, or $1.45, to reach $114.81. A 3.7% drop in US crude futures brought it to a price of $105.76.

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