World

Pain, few gains for investors as markets slumped in 2022

Published

2 years ago

December 30, 2022

Pain, few gains for investors as markets slumped in 2022

Buyers discovered few, if any, locations to soundly put their cash in 2022, as central banks within the U.S. and across the globe raised rates of interest for the primary time in years to battle surging inflation, stoking worry of a world recession.

Uncertainty about how far the Federal Reserve and different central banks would go within the battle towards inflation sparked a return of volatility. Giant swings in shares have been widespread on Wall Avenue because the Fed raised its key rate of interest seven occasions and signaled extra hikes to come back in 2023.

Russia’s invasion of Ukraine and China’s strict COVID-19 insurance policies additionally contributed to inflation and roiled the worldwide financial system in addition to markets in Asia, Europe and the U.S.

On Wall Avenue, the benchmark S&P 500 index had its worst begin to a 12 months since 1970. By June, t he index fell right into a bear market, a drop of greater than 20% from the file excessive set in early January. The vitality sector was the lone winner, benefitting from a spike in oil and fuel costs. Expertise shares tumbled after main the market throughout the pandemic.

Borrowing cash acquired dearer. The ten-year Treasury yield, which influences charges on mortgages and different loans, soared, reaching 4.22% in October after beginning the 12 months at 1.51%.

Nonetheless, climbing yields within the U.S. and overseas despatched costs for older bonds already in traders’ portfolios sharply decrease. The rout in bonds was significantly painful for fixed-income traders.

Cryptocurrency traders weren’t spared both. Bitcoin shed greater than half its worth and numerous high-flying corporations wound up in chapter courtroom.

— Alex Veiga

Right here’s a glance again on the important thing occasions in markets for 2022:

INFLATION AND THE FED

Inflation was the dominant world financial theme this 12 months. Gasoline costs within the U.S. reached $5 a gallon. Corporations both raised costs, or stored costs regular however put much less in every package deal. Europe feared working wanting pure fuel and costs there rose greater than within the U.S.

Central banks’ response to inflation overshadowed monetary markets in 2022 and will very effectively accomplish that once more subsequent 12 months. Because the 12 months started, officers on the Federal Reserve had accepted that inflation was not a brief phenomenon. Russia’s invasion of Ukraine solely made issues worse by sending vitality and meals costs hovering.

Nonetheless, it wasn’t till March, when the U.S. authorities mentioned inflation had approached 8%, that the Fed acted — too little, too late for some pundits and economists. Because the 12 months went on the Fed acquired extra aggressive, finally elevating charges seven occasions by a complete of 4.25 share factors.

Inflation within the U.S. seems to have peaked at 9.1% in June. By year-end, there have been hopeful indicators as costs for items fell and rents began declining. However powerful inflation discuss from the Fed at its final assembly of the 12 months took the steam out of what had been a fourth-quarter rally for shares.

— Chris Rugaber

For full protection of the worldwide financial system, go to https://apnews.com/hub/financial system

___

THE BEAR ROARS

Wall Avenue’s brutal 12 months left few shares unscathed, and the overwhelming majority fell right into a bear market underneath the burden of fast-rising rates of interest.

After peaking on the very first buying and selling day of 2022, it took about six months for the S&P 500 to drop greater than 20%. The most important losers have been the shares that had carried out the most effective within the rally that adopted the coronavirus crash.

Again then, high-growth tech shares roared the very best because of the juice supplied by super-low rates of interest. However within the chilly mild of 2022, these shares abruptly regarded the most costly and probably the most weak because the Fed hiked rates of interest to their highest degree in 15 years.

The ache didn’t discriminate a lot, although. Seven out of 10 shares within the S&P 500 fell in 2022, as of Dec. 21. Many analysts anticipate extra ache in early 2023 earlier than issues get higher.

— Stan Choe

To see AP’s full protection of the markets, go to: https://apnews.com/hub/financial-markets and https://apnews.com/hub/off-the-charts

___

BOND MARKET BLUES

It was one of many worst years in historical past for bond traders.

Many years-high inflation meant the mounted funds coming from bonds sooner or later gained’t purchase as many groceries, gallons of gasoline or no matter else is rising in value.

The Federal Reserve’s choice to lift rates of interest additionally hammered bond costs. As a result of newly issued bonds have been paying extra in curiosity, the older bonds sitting in lots of traders’ portfolios have been abruptly a lot much less enticing due to their decrease yields.

The most important bond fund by property, one from Vanguard that tracks the broad market, had misplaced 12.5% in 2022, as of Dec. 20. That’s by far its worst 12 months since its inception in 1987.

Traditionally bonds have held up higher than shares throughout downturns, providing some cushion for traders, however each tumbled in 2022.

— Stan Choe

___

HOUSING MARKET SLUMPS

As 2022 started, the nation’s housing market was nonetheless working purple scorching.

Home hunters competed for the fewest houses on the market in additional than twenty years, fueling bidding wars that pushed costs sharply larger. The common charge on a 30-year mortgage was barely above 3%, close to historic lows.

Then mortgage charges began to climb, spurred by expectations of upper rates of interest because the Federal Reserve started elevating its short-term lending charge in a bid to tame inflation. By October, the common charge on a 30-year house mortgage soared above 7%, a 20-year excessive.

Larger mortgage charges mixed with still-rising house costs make it troublesome for a lot of would-be consumers to afford a house. Gross sales of beforehand occupied U.S. houses noticed their greatest gross sales hunch in additional than a decade.

— Alex Veiga

___

IS TESLA ON AUTOPILOT?

You’ll be able to’t blame Tesla shareholders for feeling jilted.

CEO Elon Musk took over Twitter and seems consumed with turning across the social media firm. With Musk’s focus diverted, Tesla shares misplaced greater than half their worth, their biggest-ever annual. And Tesla’s dominance of the marketplace for electrical automobiles is waning.

Most of Musk’s wealth is tied up in Tesla inventory, which began falling in April when he disclosed a stake in Twitter. The collapse within the inventory value has bumped Musk into second place on Forbes’ listing of the world’s wealthiest individuals, behind beauty magnate Bernard Arnault.

After shopping for Twitter in October, Musk has reduce half its workers and picked fights with public officers and others.

— Tom Krisher

For full protection of Elon Musk, Twitter and Tesla, go to https://apnews.com/hub/twitter-inc

___

CONSUMERS FEEL THE PINCH

The very best inflation in 4 a long time is hitting shoppers proper of their wallets.

Households — particularly on the decrease finish of the earnings spectrum — are seemingly depleting financial savings constructed up throughout the pandemic, with extra ache to come back ought to the financial system tip right into a recession. Bank card debt ballooned and rents rose in 2022, though there are indicators housing prices can be coming down. Whereas President Biden promised scholar debtors reduction of as much as $20,000 this 12 months, that debt cancellation coverage is tied up within the courts.

Wages went up, though not on the identical tempo as inflation. Aggressive charge hikes by the Federal Reserve have pushed up the price of borrowing cash. However whereas the common charge on a bank card rose to 16.3% in August from 14.5% at the beginning of the 12 months, in keeping with the federal government, the common charge for a financial savings account continues to be simply 0.2%; it’s 0.9% for a one-year CD.

— Cora Lewis

For full protection private finance acquired to https://apnews.com/hub/financial-wellness and https://apnews.com/hub/personal-finance

UKRAINE WAR IMPACT

Russia’s invasion of Ukraine in February despatched costs hovering for the commodities the world runs on: oil, pure fuel, and wheat.

European costs for pure fuel rose to 17 occasions their prewar ranges after Russia choked off most provides over the struggle. The outcome was an vitality disaster that pushed inflation to file ranges and left governments and utilities scrambling to seek out various provides of fuel forward of winter heating season.

International oil costs spiked as Western consumers shunned Moscow’s crude, sending Brent to over $120 per barrel in Might. Europe banned most Russian oil imports in December and the Group of Seven democracies imposed a $60 per barrel value cap on Russian exports.

In the meantime file wheat costs spurred disastrous meals inflation in poor nations.

By 12 months finish, decrease costs for oil, pure fuel and electrical energy had supplied a little bit of reduction for drivers and owners.

To see full protection of the Russia-Ukraine struggle, go to https://apnews.com/hub/russia-ukraine

___

CHINA DITCHES ZERO COVID

China’s financial development and inventory market slid in 2022 underneath strain from pandemic controls and company debt, prompting the ruling Communist Occasion to ease off anti-disease restrictions and attempt to revive a struggling actual property business.

The world’s second-largest financial system shrank by 2.6% within the three months ending in June in contrast with the earlier quarter after Shanghai and different industrial facilities shut down for as much as two months to battle outbreaks.

Forecasters say annual development would possibly fall beneath 3%, among the many lowest in a long time. To chop the financial drag, the ruling get together ended testing for tens of millions of individuals and stopped requiring supermarkets and different companies to trace the well being of staff and clients. Beijing additionally tried to revive actual property, China’s greatest financial driver, by lending extra to residence consumers whereas making an attempt to stop a renewed rise in borrowing by builders.

— Joe McDonald

To see full protection of developments in China, go to https://apnews.com/hub/china

___

CRYPTO’S WILD RIDE

The 12 months started with bitcoin above $45,000 and the crypto business making additional inroads amongst politicians and mainstream monetary establishments. As 2022 ends, bitcoin is beneath $17,000, the business’s “savior” is underneath home arrest and Washington is combating over how you can regulate crypto.

With the regular, steep decline of crypto costs within the background, the dominoes started to fall with the collapse in Might of Terra, a so-called stablecoin. Buyers misplaced tens of billions of {dollars} and numerous crypto corporations confronted monetary wreck. In stepped Sam Bankman-Fried, the younger founding father of crypto change FTX, who bailed out crypto lender BlockFi and crypto agency Voyager, incomes him comparisons to the unique J.P. Morgan.

These plaudits evaporated when FTX unraveled in November. Questions on its monetary energy prompted clients to request giant withdrawals. Overwhelmed and, it seems, underfunded, FTX filed Chapter 11 chapter safety on Nov. 11. Bankman-Fried was arrested within the Bahamas and extradited to the U.S. to face felony and civil costs associated to the collapse of FTX.

— Ken Candy

To see AP’s full protection of the cryptocurrency business, go to: https://apnews.com/hub/cryptocurrency

THE STREAMING WARS

Netflix, Warner Bros. Discovery and different huge leisure corporations tumbled in 2022 as streaming companies struggled amid elevated competitors and rising inflation stifled promoting spending.

Streaming companies needed to take care of a return to regular for many individuals who had been caught at house due to lockdowns or different restrictions throughout the peak of the COVID-19 pandemic. The sheer variety of streaming choices additionally left corporations in a fierce battle for viewers’ consideration.

Streaming large Netflix misplaced about half of its worth after a steep drop in viewers within the 12 months’s first half. Disney felt the pinch from decrease promoting income, however the diversified leisure large’s inventory held up higher than most opponents.

Warner Bros. Discovery additionally struggled with promoting income, and it axed a number of movies together with “Batgirl” because it shifted technique and regarded to trim prices.

— Damian Troise

Click to comment

World

Mexico suggests it would impose its own tariffs to retaliate against any Trump tariffs

Published

3 hours ago

November 26, 2024

Press Room

Mexico suggests it would impose its own tariffs to retaliate against any Trump tariffs

MEXICO CITY (AP) — President Claudia Sheinbaum suggested Tuesday that Mexico could retaliate with tariffs of its own, after U.S. President-elect Donald Trump threatened to impose 25% import duties on Mexican goods if the country doesn’t stop the flow of drugs and migrants across the border.

Sheinbaum said she was willing to engage in talks on the issues, but said drugs were a U.S. problem.

“One tariff would be followed by another in response, and so on until we put at risk common businesses,” Sheinbaum said, referring to U.S. automakers that have plants on both sides of the border.

She said Tuesday that Mexico had done a lot to stem the flow of migrants, noting “caravans of migrants no longer reach the border.”

She also said Mexico had worked to stem the flow of drugs like the deadly synthetic opioid fentanyl, despite an influx of weapons smuggled in from the United States. She said the flow of drugs “is a problem of public health and consumption in your country’s society.”

Sheinbaum also criticized U.S. spending on weapons, saying the money should instead be spent regionally to address the problem of migration. “If a percentage of what the United States spends on war were dedicated to peace and development, that would address the underlying causes of migration,” she said.

Sheinbaum’s bristly response suggests that Trump faces a much different Mexican president than he did in his first term.

Back in late 2018, former President Andrés Manuel López Obrador was a charismatic, old-school politician who developed a chummy relationship with Trump. The two were eventually able to strike a bargain in which Mexico helped keep migrants away from the border — and received other countries’ deported migrants — and Trump backed down on the threats.

But Sheinbaum, who took office Oct. 1, is a stern leftist ideologue trained in radical student protest movements, and appears less willing to pacify or mollify Trump.

However, it’s not clear how serious Trump’s threat is. The U.S.-Mexico-Canada free trade agreement forbids just imposing tariffs on other member countries. And it’s not clear whether the economy could even tolerate sudden levies on imports: Auto plants on both sides of the border rely on each other for parts and components, and some production lines could screech to a halt.

“It is unacceptable and would cause inflation and job losses in Mexico and the United States,” Sheinbaum said, while offering to talk about the issues.

“Dialogue is the best path to achieve understanding, peace and prosperity for our two countries,” Sheinbaum said. “I hope our teams can meet soon.”

Late Monday, Trump said he would impose a 25% tax on all products entering the country from Canada and Mexico, and an additional 10% tariff on goods from China, as one of his first executive orders.

The tariffs, if implemented, could dramatically raise prices for American consumers on everything from gas to automobiles to agricultural products. The U.S. is the largest importer of goods in the world, with Mexico, China and Canada its top three suppliers, according to the most recent U.S. Census data.

Trump made the threats Monday in a pair of posts on his Truth Social site in which he railed against an influx of illegal migrants, even though apprehensions at the southern border have been hovering near four-year lows.

“On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders,” he wrote, complaining that “thousands of people are pouring through Mexico and Canada, bringing Crime and Drugs at levels never seen before,” even though violent crime is down from pandemic highs.

He said the new tariffs would remain in place “until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”

“Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem. We hereby demand that they use this power,” he went on, “and until such time that they do, it is time for them to pay a very big price!”

World

6 dead as protests erupt in Pakistan over jailed former Prime Minister Imran Khan

Published

4 hours ago

November 26, 2024

Press Room

6 dead as protests erupt in Pakistan over jailed former Prime Minister Imran Khan

Six people were killed as supporters of imprisoned former Pakistani Prime Minister Imran Khan clashed with security forces in Islamabad on Tuesday.
Thousands of security personnel have been deployed to central Islamabad to control the protests.
More than 4,000 Khan supporters have been arrested, with the government also suspending mobile and internet services, blocking major travel routes and banning rallies to suppress the unrest.

Supporters seeking the release of imprisoned Pakistani former Prime Minister Imran Khan broke through a ring of shipping containers blocking off the capital on Tuesday, and battled security forces despite a government threat to respond with gunfire. Six people have died in the violence.

Thousands of security forces have poured into central Islamabad in an attempt to quell protests in support of Khan that have gripped the capital and its surrounding areas since Sunday. The popular politician has been in jail for over a year and faces more than 150 criminal cases that his party says are politically motivated.

Authorities say only courts can order the release of Khan, who was ousted in 2022 through a no-confidence vote in Parliament. He has been imprisoned since his first conviction in a graft case, in August 2023.

FORMER PAKISTANI PRIME MINISTER IMRAN KHAN SENTENCED TO 10 YEARS IN PRISON IN CIPHER CASE

On Tuesday, Pakistan’s army took control of D-Chowk, a large square in downtown Islamabad’s Red Zone, which houses key government buildings and is where visiting Belarusian President Alexander Lukashenko is staying. Paramilitary rangers and police were also out in force and some fired warning shots into the air.

Paramilitary soldiers fire tear gas shells to disperse supporters of imprisoned former Prime Minister Imran Khan during clashes in Islamabad, Pakistan, on Nov. 26, 2024. Supporters seeking the release of Khan broke through a ring of shipping containers blocking off the capital on Tuesday, and battled security forces despite a government threat to respond with gunfire. Six people have died in the violence. (AP Photo/Irtisham Ahmed)

Still, Khan’s wife, Bushra Bibi, who is leading the protests, made slow progress toward the square in a heavily guarded convoy, surrounded by well-wishers.

Interior Minister Mohsin Naqvi threatened that security forces would respond with live fire if protesters fired weapons at them.

“We have now allowed police to take any decision according to the situation,” Naqvi said later while visiting the square.

IMPRISONED FORMER PAKISTANI PM IMRAN KHAN ADDRESSES IMF IN ELECTION AUDIT PUSH

Protester Shahzor Ali said people were on the streets because Khan had called for them to be there. “We will stay here until Khan is among us. He will decide what to do next,” Ali said.

“If they again fire bullets, the bullet will be responded with the bullet,” he said.

Protester Fareeda Bibi, who is not related to Khan’s wife, said people have suffered greatly for the last two years.

“We have really suffered for the last two years, whether it is economically, politically or socially. We have been ruined. I have not seen such a Pakistan in my life,” she said.

Paramilitary soldiers fire tear gas shells to disperse supporters of imprisoned former Prime Minister Imran Khan during clashes in Islamabad, Pakistan, on Nov. 26, 2024. (AP Photo/Irtisham Ahmed)

Police so far have used tear gas in an attempt to disperse the crowds. The dead include four members of the security services and one civilian who were killed when a vehicle rammed them on a street overnight into Tuesday. Prime Minister Shehbaz Sharif denounced the attack, saying an “anarchist group” was deliberately targeting law enforcement personnel. There was no claim of responsibility for the ramming. A police officer died separately.

Scores of people have also been injured, including journalists who were attacked by demonstrators. Dozens of Khan supporters beat a videographer covering the protest for The Associated Press and took his camera. He sustained head injuries and was treated in a hospital.

VISITATION PRIVILEGES REVOKED FOR IMPRISONED EX-PAKISTANI PM IMRAN KHAN AFTER REPORTS OF POSSIBLE ATTACK

Pakistani media have mostly stopped filming and photographing the rally, instead focusing on the security measures and the city’s deserted streets.

By Tuesday afternoon, fresh waves of protesters made their way unopposed to their final destination in the Red Zone. Most demonstrators had the flag of Khan’s party, Pakistan Tehreek-e-Insaf, around their shoulders or wore its tricolors on accessories.

Former Pakistani Prime Minister Imran Khan is pictured at the Diaoyutai State Guesthouse on Oct. 9, 2019, in Beijing, China. (Parker Song-Pool/Getty Images)

Naqvi said Khan’s party rejected a government offer to rally on the outskirts of the city.

Information Minister Atta Tarar warned there would be a severe government reaction to the violence.

He said the government did not want Bushra Bibi to achieve her goal of freeing Khan. “She wants bodies falling to the ground. She wants bloodshed,” he said.

In a bid to foil the unrest, police have arrested more than 4,000 Khan supporters since Friday and suspended mobile and internet services in some parts of the country and messaging platforms were also experiencing severe disruption in the capital.

Khan’s party relies heavily on social media to demand Khan’s release and uses messaging platforms such as WhatsApp to share information, including details of events. The X platform, which is banned in Pakistan, is no longer accessible, even with a VPN.

On Thursday, a court prohibited rallies in the capital and Naqvi said anyone violating the ban would be arrested. Travel between Islamabad and other cities has become nearly impossible because of shipping containers blocking the roads. All educational institutions remain closed.

World

Bangladesh police clash with protesters as Hindu leader detained

Published

5 hours ago

November 26, 2024

Press Room

Bangladesh police clash with protesters as Hindu leader detained

A court in Chittagong denied bail to the man charged with sedition as India cautioned about justice for minorities.

Police in Bangladesh have used tear gas against Hindus protesting against the arrest of a religious leader as neighbouring India called for ensuring the safety of Hindus and minorities in the Muslim-majority nation.

Chinmoy Krishna Das, also known as Krishna Das Prabhu, was arrested at Dhaka airport on Monday on charges including sedition.

A court in the port city of Chittagong on Tuesday denied bail to the priest associated with the International Society for Krishna Consciousness (ISKCON), widely known as the Hare Krishna movement.

According to the city’s police, more than 2,000 supporters surrounded the van and blocked its path for some time when Das was being escorted back to prison from court.

The demonstrators threw bricks at the police and officers fired tear gas to disperse the crowds, said Chittagong Metropolitan Police Commissioner Hasib Aziz, who added no one was seriously hurt.

Das’s arrest set off protests by his supporters in both Chittagong, the country’s second-largest city, and the capital, Dhaka.

India noted the arrest and denial of bail with “deep concern”. The neighbouring Hindu-majority country’s Ministry of External Affairs said in a statement that the incident follows attacks on Hindus and other minorities, along with places of worship, by “extremist elements in Bangladesh”.

It said the perpetrators of those incidents remain at large while Bangladeshi authorities pressed charges against “a religious leader presenting legitimate demands through peaceful gatherings”.

Sedition charges were filed against Das in October after he led a large rally in Chittagong, during which it is accused he disrespected Bangladesh’s national flag.

The rally was aimed at demanding justice for Hindus facing targeted attacks in Bangladesh and seeking better protections for minorities.

The interim government, which took over in the aftermath of former Prime Minister Sheikh Hasina’s flight from the country on August 5 amid a mass uprising against her rule earlier this year, has said the threat to Hindus is being exaggerated and they are working on the issue.

While there was large-scale looting and the ransacking of national monuments and government buildings in the wake of Hasina’s overthrow, student leaders who spearheaded the protests had also asked supporters to guard Hindu temples and churches.

More than 90 percent of the population in Bangladesh is Muslim, with Hindus – many of who support Hasina’s Awami League party – making up almost all of the rest.

“We urge Bangladesh authorities to ensure the safety and security of Hindus and all minorities, including their right of freedom of peaceful assembly and expression,” the Indian ministry said.