Federal Reserve Chair Jerome Powell’s signal of higher-for-longer interest rates coursed through markets Monday, sinking stocks and equity futures and lifting two-year Treasury yields to levels last seen in 2007. A global share index fell to a one-month low as Asian equities shed over 2%, hurt by tech firms. Losses on Nasdaq 100 and European futures were at least 1%. Progress in the US-China delisting spat helped to cushion Chinese stocks.
The Bloomberg Dollar Spot Index pushed toward the record hit last month as investors sought a haven from spiking volatility. Commodity-linked currencies as well as the yen, the pound and the offshore yuan were under pressure. Bonds sold off and a deepening inversion of the Treasury yield curve underscored expectations of a recession as monetary policy tightens. The US two-year yield, sensitive to expectations around Fed policy, hit 3.47% Powell in his address last week at the Fed’s Jackson Hole symposium flagged the likely need for restrictive monetary policy for some time to curb high inflation and cautioned against loosening monetary conditions prematurely. He also warned of the potential for economic pain for households and businesses. Those comments contrast with bets for reductions in US borrowing costs next year as growth slows. The locus for much of the investor angst is the equities market, further undoing a bounce in global shares from the bear-market lows of mid-June. Other risks include China’s slowdown and Europe’s energy crisis. Bitcoin broke below the $20,000 level some view as a marker of a deeper slide in investor sentiment. Gold retreated but oil made gains on supply risks. The relative resilience in China’s stock market may reflect optimism about a preliminary deal between Beijing and Washington to ease a dispute over reviewing audits of Chinese firms. An agreement is needed to avert the delisting of about 200 Chinese companies from US exchanges. The mood in global markets overall remains downbeat against the backdrop of a slowing world economy struggling with the highest inflation in a generation, stoked by disruptions from Russia’s war in Ukraine and China’a Covid curbs.
Nikkei -2,62% Hang Seng -0,70% CSI -0,56% Shanghai -0,14% Shenzen -0,02%
Eur$ 0,9920 CNH 6,9254 CNY 6,9148 JPY 138,75 GBP 1,1660 CHF 0,9697 RUB 60,5641 TRY 18,1788 WTI$ 94,21 Gold 1,723,18 BTC 19,800 -0,90% ETH 1,450 -2%
S&P -0,85% Nasdaq -1,2% EuroStoxx -1,28% FTSE -0,76% Dax -1,48% SMI
Macro :
- China’s Growth Prospects Weaken as Economists Cut 2023 Forecasts
- German Finance Chief Sounds Alarm on Soaring Power Prices (1)
- Britain Bets on Futuristic Batteries to Cut Dependence on Gas
- Bitcoin Back Down Below $20,000 On Post-Jackson Hole Caution
- Heavy Financial Loss Shows Russia Risks in Beijing: China Today
- Truss Will Declare China Official ‘Threat’ for First Time: Times
- Truss Mulls VAT Cut, Tax Threshold Hike to Ease UK Crisis
- Goldman Says Market Sees 50% Risk of China Stocks Exiting US
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