Stocks and US equity futures extended declines at the end of a week that underscored expectations for tighter monetary policy and a slowing global economy. A dollar gauge rose to yet another record as 10-year Treasury yields held near the highest in a decade.
(Bloomberg) — Stocks and US equity futures extended declines at the end of a week that underscored expectations for tighter monetary policy and a slowing global economy. A dollar gauge rose to yet another record as 10-year Treasury yields held near the highest in a decade.
Europe’s Stoxx 600 Index dropped to the lowest level since January 2021 and was poised to join US and regional peers in a bear market. Energy shares led the decline as oil fell, while Credit Suisse Group AG plunged to a record after denying a report that it’s considering exiting the US. Asian shares dropped and US benchmarks were set to open lower.
Goldman Sachs Group Inc. slashed its year-end target for the S&P 500 Index to 3,600 from 4,300, citing a higher interest-rate path from the Federal Reserve, while strategists gave up on a year-end rally for European stocks as private-sector activity in the region continued to contract.
UK bond yields surged and the pound fell as Chancellor of the Exchequer Kwasi Kwarteng unveiled the country’s economic growth plan and the Debt Office announced it would sell more gilts than planned. The economy has probably already entered into recession, a survey of purchasing managers showed.
While the dollar continued its relentless advance on expectations for higher rates, a surprise cut by Turkey’s central bank sent the lira to a fresh all-time low and its longest weekly losing streak in 23 years. The yen fluctuated as traders braced for more action after Japan intervened to prop up the ailing currency for the first time since 1998.
The Fed has given its clearest signal yet that it’s willing to tolerate a recession as the necessary trade-off for regaining control of inflation, with officials forecasting a further 1.25 percentage points of tightening before year-end. Rate hikes across Europe and Asia on Thursday also damped market sentiment.
Investors are flocking to cash and shunning almost every other asset class as they turn the most pessimistic since the global financial crisis, according to Bank of America Corp. strategists.
Elsewhere in markets, gold edged toward a two-year low.
The energy market faces a very volatile last quarter of the year, Amrita Sen, co-founder and research director of Energy Aspects Ltd. said on Bloomberg Television. “It’s just too many different and contradictory factors driving prices right now,” she said, citing demand concerns from recessionary fears and supply constraints relating to Iran and Russia, as well as a lack of spare capacity from OPEC.
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Here are some of the main moves in markets:
Stocks
- The Stoxx Europe 600 fell 1% as of 10:25 a.m. London time
- Futures on the S&P 500 fell 0.7%
- Futures on the Nasdaq 100 fell 0.8%
- Futures on the Dow Jones Industrial Average fell 0.6%
- The MSCI Asia Pacific Index fell 0.5%
- The MSCI Emerging Markets Index fell 1%
Currencies
- The Bloomberg Dollar Spot Index rose 0.6%
- The euro fell 0.8% to $0.9755
- The Japanese yen fell 0.4% to 142.90 per dollar
- The offshore yuan fell 0.6% to 7.1278 per dollar
- The British pound fell 0.6% to $1.1188
Bonds
- The yield on 10-year Treasuries was little changed at 3.72%
- Germany’s 10-year yield advanced two basis points to 1.98%
- Britain’s 10-year yield advanced 17 basis points to 3.66%
Commodities
- Brent crude fell 1.8% to $88.79 a barrel
- Spot gold fell 0.6% to $1,661.69 an ounce
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