Wall Street opened sharply lower as global stocks hit five-week lows, while bond yields climbed to multi-year highs on Friday as investors brace for rate hikes in the United States, Great Britain Britain and in the euro zone.
The Dow Jones Industrial Average fell 1.03% in early trading, while the S&P 500 fell 0.91% and the Nasdaq Composite lost 0.53%.
The yuan hit a nine-month low, meanwhile, as shutdowns in Shanghai hit China’s growth outlook.
US Federal Reserve Chairman Jerome Powell said on Thursday that a half-point interest rate hike would be “on the table” at the May Fed meeting, adding that it would be appropriate “to act a little faster”.
European Central Bank officials said on Thursday that the central bank could start raising eurozone rates as early as July, while Bank of England interest rate chief Catherine Mann said Borrowing costs are likely to rise further.
“The Fed, the ECB and the Bank of England were pushing hawkish comments on the markets and the markets reacted,” said Monica Defend, director of the Amundi Institute, while adding:
“For the euro zone, we are more skeptical about the fragility of the economic cycle, there is a big potential for recession in Germany and Italy.”
The MSCI global equity index fell 1.07% to its lowest since mid-March.
Selling pressure persisted in bond markets, with yields on five-year and two-year U.S. Treasuries both hitting their highest levels since late 2018.
Benchmark 10-year Treasury bond yields were last at 2.9064%. [US/]
European stocks fell 1.56%, with France’s CAC 40 down 1.54% ahead of Sunday’s presidential poll. Britain’s FTSE fell 0.93%.
In currency markets, the yuan hit a nine-month low and was on course for its worst week since 2018.
JPMorgan lowered its forecast for the currency on Friday, adding to the increasingly gloomy view on the yuan among major investment banks.
The dollar remained stable at 128.35 yen after talks of a joint Japan-U.S. intervention in the foreign exchange market. The dollar index, which tracks the greenback against a basket of six currencies, rose 0.43% as it approached two-year highs.
Oil prices weakened, weighed down by the prospect of interest rate hikes, weaker global growth and Covid-19 lockdowns in China that hurt demand, even as the European Union weighed a ban on Russian oil. [O/R]
Brent crude fell 1.05% to $107.16 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 1.16% to $102.52.
The price of oil has been increasingly volatile in recent months.
Since the inception of the Brent futures contract, there have only been 29 days when the gap between the intraday high and low was $8 a barrel or more. Of these, 16 took place this year.
Spot gold fell 0.32% to $1,945.36 an ounce.
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