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Selloff Rises As BOE Takes Attention After Fed Warning: Markets End


(Bloomberg) – U.S. stocks and futures fell after Jerome Powell said the Federal Reserve would raise interest rates more than previously anticipated, eliminating risk appetite. Global bond yields rose.

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The sell-off spread after the S&P 500 fell 2.5% on Wednesday. Chinese shares in Hong Kong edged up after the government’s assertion of Covid-Zero stance dashed hopes of reopening.

The Fed raised interest rates by 75 basis points for the fourth time in a row, bringing the top of the target range to 4%, the highest level since 2008. Traders immediately raised the interest rate to the highest in line. market implications for next year and turn their attention. decision by the Bank of England late on Thursday.

“Every time the market has a glimmer of hope for dovishness, it gets hit in the nose by a rolled-up newspaper,” said Scott Rundell, chief investment officer at Mutual Ltd..

The dollar rose against the 10-currency group as investors looked at US jobs data, which could help determine the pace of upcoming rate hikes. The pound fell 1% as the BOE expected its biggest rate hike in 33 years.

“There is likely to be some profit taking on long dollar positions after the big moves post the results of the FOMC and FOMC meetings,” said David Forrester, senior FX strategist at Credit Agricole CIB in Hong Kong. Powell’s press conference.

Global bonds tumbled on Thursday after the Fed meeting. Two-year Treasuries led the sell-off on Wednesday following Powell’s comments, but at 4.62%, they are still about 40 basis points below the 5.06% peak in the yield calculated on Fed fund futures contract.

“Factoring in the assessment of the bond market, markets are increasingly convinced that the path towards end-of-term rates will include a recession,” said Quincy Krosby, global chief strategy officer at LPL Financial. .

Wheat prices fell after Russia agreed to resume a deal that would allow Ukraine’s crop exports to be safe. Oil fell after Powell’s comments on interest rates overshadowed tight supply.

This week’s main events:

  • Bank of England Rate Decision, Thursday

  • US factory orders, durable goods, trade, initial jobless claims, ISM services index, Thursday

  • ECB President Christine Lagarde speaks, Thursday

  • US Nonfarm Payrolls, Unemployment, Friday

Some key moves in the market:

Inventory

  • Stoxx Europe 600 down 1.1% at 8:45am London time

  • S&P 500 futures fell 0.2%

  • Nasdaq 100 futures fell 0.3%

  • Futures on the Dow Jones Industrial Average fell 0.1%

  • MSCI Asia Pacific Index up 0.8%

  • The MSCI Emerging Markets Index rose 0.6%.

Currency

  • The Bloomberg Dollar Spot Index is up 0.5%.

  • The euro fell 0.5% to $0.9768

  • Japanese yen fell 0.1% to 148.10 per dollar

  • The offshore yuan was little changed at 7.3424 per dollar

  • British Pound drops 1% to $1.1274

Electronic money

  • Bitcoin up 0.5% to $20,281.31

  • Ether up 2.1% to $1,542.56

Bonds

  • Yields on 10-year Treasuries rose 5 basis points to 4.15%

  • German 10-year yield rose 10 basis points to 2.24%

  • UK 10-year yield rose seven basis points to 3.47%

Goods

  • Brent crude fell 1.2% to $94.96 per barrel

  • Spot gold fell 0.6% to $1,626.17 an ounce

–With support from Georgina Mckay, Matthew Burgess and Michael G. Wilson.

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