Stocks fall as Snap cracks rally and the European Central Bank raises interest rates in July.

SYDNEY/LONDON (Reuters) – Shares fell all over the world on Tuesday because company earnings were not as good as expected and people were worried that the global economy was growing too slowly.

Futures on the S&P 500 fell 1.25 percent, while Nasdaq futures fell 2%.Traders said this was because Snap (NYSE: SNAP) warned about its earnings, which caused its shares to drop 28%.

This happened after the MSCI broadest index of Asia-Pacific shares outside of Japan fell by 1.2% and the benchmark STOXX index of European shares fell by 0.9%.

As investors waited for the May Purchasing Managers Index data to come out in the morning session for clues about the slowing economy, all of the major sectors went down. Utilities and commodity-related stocks fell the most.

Citi analysts said that their analysis showed that “bearish positioning” on U.S. equity futures had started to stabilize and that people with “short” positions were closing out their bets after making big money.

Even though the positioning on the European stock market is still short, the momentum to sell is slowing, they added.

The dollar index, which measures how the dollar performs against a basket of major currencies, fell 0.3% to 101.81, the lowest level in a month.

The euro stayed close to its highs from a month ago as the chances of an ECB rate hike in July got smaller.

That put the euro at $1.0727. Overnight, it went up 1.2%, which was its best day since early March. It is now running into strong chart resistance near $1.0756.

DISAPPOINTING DATA

The fact that U.S. Vice President Joe Biden said on Monday that he was thinking about lowering tariffs on China and that Beijing kept promising to boost the economy gave the markets a little bit of comfort.

China’s zero-COVID policy and lockdowns have already done a lot of damage to its economy.

“After disappointing April activity data, we have again lowered our China GDP (gross domestic product) forecast.” “We now expect China’s GDP to shrink by 5.4% on an annualized basis in the second quarter, down from 1.5% before,” warned analysts at JPMorgan (NYSE:JPM).

“Our estimate for global growth in the second quarter is only 0.6% on an annualized basis. This is by far the worst quarter since the global financial crisis outside of 2020. “

Early surveys of manufacturing purchasing managers in Europe and the U.S. for May could show a slowdown in a part of the global economy that has been strong.

Because of supply bottlenecks, in May, Japan’s manufacturing activity grew at the slowest rate in three months. At the same time, Toyota cut its production plans.

Analysts have also been cutting their growth predictions for the United States because the Federal Reserve seems certain to raise interest rates by a full percentage point in the next two months.

This week, a number of Fed speakers and the minutes of the last policy meeting, which are due on Wednesday, are likely to emphasize the hawkish message.

The European Central Bank is also becoming more aggressive. President Christine Lagarde surprised many when she said that interest rates could go up as soon as July.

Gold went up to $1,856 an ounce after the dollar lost some ground. [GOL/]

Oil prices were caught between worries about a possible global downturn and the possibility of higher fuel demand from the U.S. summer driving season and Shanghai’s plans to reopen after a two-month coronavirus lockdown. [O/R]

Brent dropped 1.14 percent to $112.14 per barrel, while US crude dropped 66 cents to $109.08 per barrel.