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‘Profit recession’ warning as markets wait for aggressive central bank moves

A trader works on the floor of the New York Stock Exchange (NYSE) in New York, June 13, 2022.

Brendan McDermid | Reuters

Global stock markets diverged on Tuesday after a worldwide sell-off in the previous session, as analysts assessed the longevity of the bear market and risk of recession.

U.S. stock futures bounced in early premarket trade on Tuesday after the S&P 500 slid back into bear market territory the day before. 

Investors are awaiting a landmark monetary policy announcement from the Federal Reserve on Wednesday, with bets on a 75 basis point interest rate hike rising in light of a shock 8.6% annual inflation print for May.

The prospect that the Fed and other central banks will be forced to hike interest rates more aggressively in order to rein in inflation — at a time when growth is slowing across most major economies — has reignited fears of a global recession.

Profit recession

Central banks ‘starting to panic’

Wall Street’s overnight losses bled into markets in Asia-Pacific on Tuesday, with major bourses largely declining and Australia’s S&P/ASX 200 plunging more than 3.5% on its return to trade following a public holiday. European markets were choppy on Tuesday as the Stoxx 600 index jumped to a 1% gain at the start of trading, before sliding back to the flatline around an hour later.

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