Covid, war and Fed push world stocks down for fourth day

World stocks fell for a fourth consecutive session on Tuesday as a combination of rising Covid-19 cases in China, the war in Ukraine and worries about the Federal Reserve raising interest rates this week for the first time since 2018 hit confidence.

Though oil prices tumbled more than 5 per cent with Brent crude back below $100 a barrel, spelling some relief for battered European stock markets and the euro currency, the market rebound signalled that sentiment was fragile.

In midday London trading, Euro STOXX (.STOXX) was 1.1 per cent weaker, France's CAC 40 (.FCHI) was down 1.1 per cent, Britain's FTSE (.FTSE) was 0.8 per cent lower. US stock futures were up 0.2 per cent

"The forthcoming Fed and BOE meetings are seeing equities under pressure as the markets anticipate that central banks will continue to focus on bearing down on rising inflationary pressures, ignoring the potential need for looser policy against the backdrop of a deteriorating growth outlook," said Stuart Cole, head macro economist at Equiti Capital.

European stocks had been rebounding in recent sessions but they remain down sharply in 2022.

A net 69 per cent of respondents in a monthly fund manager survey expect the European economy to weaken over the coming year, the highest share since 2011, according to BoFA.

The 81 percentage point swing from February's net 12 per cent who still expected to see growth marks the biggest month-on-month drop since 1994.

In the United States, another sharp drop left the Nasdaq 100 down more than 20 per cent from its record peak late last year. Wall Street futures pointed to more pain at the open.

The MSCI World Index (.MIWD00000PUS) shed 0.2 per cent and flirted with a one-year low hit last week.

A lack of major progress in Ukraine-Russia talks on Monday added to the nervousness while concerns grew of possible new tensions between China and the United States.

Washington has warned Beijing against providing military or financial help to Moscow after Russia's invasion of Ukraine. read more . Chinese companies listed in New York fell sharply during premarket trade on Tuesday. read more

"The question we are asking is whether the markets have reached peak bearishness," said Jack Siu, Credit Suisse's chief investment officer for Greater China.

MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 2.82 per cent, led by pronounced weakness in Chinese stocks. The index is down 11 per cent so far this month.

Hong Kong's Hang Seng Index (.HSI) remained mired in negative territory on Tuesday, dropping 5.8 per cent following an almost 5 per cent selloff a day earlier. Hong Kong's main board is down 19 per cent so far in March -- the index has not fallen so heavily in one month since 2008.

The city's tech index (.HSTECH) has been hammered, falling 32 per cent this month as investors worry about the next regulatory crackdown from US and Chinese authorities on the sector.