Published on: Amended:
Hong Kong (AFP) – Stocks and crude prices fell, while the dollar held at multi-year highs on Wednesday as recession fears mount, while traders are also increasingly concerned about tensions with Russia after she declared her victory in controversial polls over the annexation of Ukraine.
Investors are also watching London closely, after new Finance Minister Kwasi Kwarteng’s mini tax cut budget last week sent shockwaves through markets, pushing the pound to a record high and causing serious warnings for the UK economy.
As Asia posted small gains on Tuesday, New York and Europe ended in the red again, with Wall Street rattled by data showing a surprise improvement in US consumer confidence – likely due to a drop gas prices – and a jump in home sales. .
The figures underscored the resilience of the world’s biggest economy despite three successive rate hikes by the Federal Reserve – and expectations of another in November – as it tries to rein in inflation, which has been high for four decades.
Several Fed officials lined up this week to reaffirm their determination to keep rising until prices are brought under control, even at the cost of a recession.
Observers are now betting that borrowing costs will hit around 4.75% next year, and some policymakers have suggested they could stay high for some time.
The prospect of such tight monetary policy hurt stocks, as 10-year U.S. Treasury yields — a proxy for future rates — approach 4% for the first time since 2010.
The Dow and S&P 500 ended lower on Tuesday, although the Nasdaq edged higher.
Asia resumed its bearish trend, with Tokyo, Hong Kong and Seoul down more than 2%, while Shanghai, Sydney, Singapore, Wellington, Taipei, Manila and Jakarta were also down.
Russian nuclear alert
And the dollar remains the benchmark unit as the Fed leads the way in central bank tightening.
“The fact that we have such a strong increase in US yields is attracting flows into the US dollar,” said Nannette Hechler-Fayd’herbe of Credit Suisse Group AG.
“Until monetary and fiscal policy around the world really comes to bolster their own currencies, we should expect a very strong dollar.”
The greenback rose against the pound as the British currency was battered by fears that Kwarteng’s spending plan would increase borrowing just as England’s band tried to raise rates to fight against inflation, causing consternation to many observers.
The dollar was also approaching 145 yen, having fallen from a high near 146 yen after the Japanese government intervened last week to support its currency.
Sentiment was also shaken by concerns over developments in Ukraine, after Kremlin-installed authorities in four Russian-held regions claimed victory in annexation votes, with Moscow warning it could use nuclear weapons to defend territories.
Ukraine and its allies have denounced the so-called referendums as a sham, saying the West will never recognize the results of the polls.
But former Russian leader Dmitry Medvedev, an ally of President Vladimir Putin and now deputy chairman of the country’s Security Council, issued a stark warning that Moscow was ready to act decisively.
“I want to remind you – the deaf who only hear themselves: Russia has the right to use nuclear weapons if necessary,” he said on social media.
In crude markets, the two major contracts fell more than one percent on recession fears and, as Bloomberg quoted sources, saying U.S. inventories rose more than four million barrels in the week. last.
The drop comes despite a report that Moscow is calling on OPEC and other major groups to cut production by a million barrels a day when they meet next week.
Key figures around 02:30 GMT
Tokyo – Nikkei 225: 2.2% drop to 25,984.51 (pause)
Hong Kong – Hang Seng Index: DOWN 2.4% to 17,433.43
Shanghai – Composite: 0.8% down at 3,069.22
Pound/dollar: DOWN to $1.0663 from $1.0730 on Tuesday
Euro/dollar: DOWN at $0.9551 against $0.9595
Euro/pound: UP at 89.71 pence against 89.39 pence
Dollar/yen: UP to 144.83 yen from 144.81 yen
West Texas Intermediate: 1.9% drop to $76.99 a barrel
North Sea Brent: 1.9% drop to $84.67 a barrel
New York – Dow: DOWN 0.4% to 29,134.99 (closing)
London – FTSE 100: 0.5% drop to 6,984.59 (close)
© 2022 AFP
Published on: Amended:
Hong Kong (AFP) – Stocks and crude prices fell, while the dollar held at multi-year highs on Wednesday as recession fears mount, while traders are also increasingly concerned about tensions with Russia after she declared her victory in controversial polls over the annexation of Ukraine.
Investors are also watching London closely, after new Finance Minister Kwasi Kwarteng’s mini tax cut budget last week sent shockwaves through markets, pushing the pound to a record high and causing serious warnings for the UK economy.
As Asia posted small gains on Tuesday, New York and Europe ended in the red again, with Wall Street rattled by data showing a surprise improvement in US consumer confidence – likely due to a drop gas prices – and a jump in home sales. .
The figures underscored the resilience of the world’s biggest economy despite three successive rate hikes by the Federal Reserve – and expectations of another in November – as it tries to rein in inflation, which has been high for four decades.
Several Fed officials lined up this week to reaffirm their determination to keep rising until prices are brought under control, even at the cost of a recession.
Observers are now betting that borrowing costs will hit around 4.75% next year, and some policymakers have suggested they could stay high for some time.
The prospect of such tight monetary policy hurt stocks, as 10-year U.S. Treasury yields — a proxy for future rates — approach 4% for the first time since 2010.
The Dow and S&P 500 ended lower on Tuesday, although the Nasdaq edged higher.
Asia resumed its bearish trend, with Tokyo, Hong Kong and Seoul down more than 2%, while Shanghai, Sydney, Singapore, Wellington, Taipei, Manila and Jakarta were also down.
Russian nuclear alert
And the dollar remains the benchmark unit as the Fed leads the way in central bank tightening.
“The fact that we have such a strong increase in US yields is attracting flows into the US dollar,” said Nannette Hechler-Fayd’herbe of Credit Suisse Group AG.
“Until monetary and fiscal policy around the world really comes to bolster their own currencies, we should expect a very strong dollar.”
The greenback rose against the pound as the British currency was battered by fears that Kwarteng’s spending plan would increase borrowing just as England’s band tried to raise rates to fight against inflation, causing consternation to many observers.
The dollar was also approaching 145 yen, having fallen from a high near 146 yen after the Japanese government intervened last week to support its currency.
Sentiment was also shaken by concerns over developments in Ukraine, after Kremlin-installed authorities in four Russian-held regions claimed victory in annexation votes, with Moscow warning it could use nuclear weapons to defend territories.
Ukraine and its allies have denounced the so-called referendums as a sham, saying the West will never recognize the results of the polls.
But former Russian leader Dmitry Medvedev, an ally of President Vladimir Putin and now deputy chairman of the country’s Security Council, issued a stark warning that Moscow was ready to act decisively.
“I want to remind you – the deaf who only hear themselves: Russia has the right to use nuclear weapons if necessary,” he said on social media.
In crude markets, the two major contracts fell more than one percent on recession fears and, as Bloomberg quoted sources, saying U.S. inventories rose more than four million barrels in the week. last.
The drop comes despite a report that Moscow is calling on OPEC and other major groups to cut production by a million barrels a day when they meet next week.
Key figures around 02:30 GMT
Tokyo – Nikkei 225: 2.2% drop to 25,984.51 (pause)
Hong Kong – Hang Seng Index: DOWN 2.4% to 17,433.43
Shanghai – Composite: 0.8% down at 3,069.22
Pound/dollar: DOWN to $1.0663 from $1.0730 on Tuesday
Euro/dollar: DOWN at $0.9551 against $0.9595
Euro/pound: UP at 89.71 pence against 89.39 pence
Dollar/yen: UP to 144.83 yen from 144.81 yen
West Texas Intermediate: 1.9% drop to $76.99 a barrel
North Sea Brent: 1.9% drop to $84.67 a barrel
New York – Dow: DOWN 0.4% to 29,134.99 (closing)
London – FTSE 100: 0.5% drop to 6,984.59 (close)
© 2022 AFP