Oil turbulence, the COVID crisis in China and the collapse of cryptocurrencies are all elements that have investors worried as they begin to analyze what will be a recession year.
Rising interest rates and slowing economies dominate most outlooks for 2023, including those released by the Organization for Economic Co-operation and Development on Tuesday.
Despite expecting the global economy as a whole to avoid full-blown recession, the Paris-based OECD said it sees global growth slowing to 2.2% a year. Then, compared to 3.1% in 2022 – the British and German economies are likely to contract in 2023.
Underscoring sluggish growth, China’s battle with COVID and its growing restrictions have only worsened. Beijing has closed parks, malls and museums, while other Chinese cities have resumed mass testing for COVID-19, with the country reporting new infections near their peak in April.
Although Hong Kong stocks took another hit, global markets were more mixed on Tuesday as oil prices, dragged down by China’s troubles and fears of a global recession, went into a tailspin in the past 24 hours.
Brent crude fell more than 5% to a 10-month low of $82 a barrel late Monday as OPEC considered raising production. But Saudi Arabia’s denials have seen it recover all its losses since then and it moved around $88 in the first hour today.
The US dollar also gave back some of Monday’s strong gains. San Francisco Federal Reserve President Mary Daly struck a more measured note on Fed tightening, saying on Monday that the real impact of the U.S. central bank’s interest rate hike is likely to be greater than the Fed’s target. of the short-term interest rate.
The pain in the crypto world continues, with many investors fearing that the fallout from the collapse of the FTX exchange is just beginning.
Bitcoin – which has now fallen nearly 80% in the past year – fell to a two-year low of $15,481 last Monday. Analysts estimate that over 55% of all money ever invested in the major cryptocurrency is now underwater.
Investigations, allegations and lawsuits throughout the cryptocurrency industry have continued. Cryptocurrency lender Genesis said on Monday it had no immediate plans to file for bankruptcy, days after FTX’s bankruptcy forced it to suspend customer repayments.
Another worrying development for anyone involved in the industry has been the growing number of lawsuits against sponsors and advertisers of the FTX failure – a wake-up call for many celebrities, sports teams and corporate advertisers who have started in crypto.
The Golden State Warriors were sued on Monday by an FTX client who accused the defending National Basketball Association champions of promoting the scam of the now-defunct cryptocurrency exchange. And Bloomberg News reporters have reported that American football star Tom Brady is being investigated by Texas regulators.
In business news, Baidu’s third-quarter revenue beat estimates as the Chinese search engine giant benefited from a rebound in online ad sales and growth in its cloud and cloud artificial intelligence business.
Key developments that could drive US markets later in the day on Tuesday:
* Philadelphia Federal Reserve survey of non-manufacturing businesses in November, Richmond Fed business survey in November, consumer confidence in the euro area in November.
* Cleveland Federal Reserve Chair Loretta Mester, St. Louis Fed President
* Results from US companies: Analog Devices, HP, Dollar Tree, Autodesk
* US Treasury sells 7-year notes, 2-year floating rate notes