Wall Street opened sharply lower as world stocks hit a five-week low, while bond yields hit multi-year highs on Friday as investors hiked rates in the United States, Britain and the euro area. were ready for
Dow Jones The Industrial Average dropped 1.03% in early trade, while the S&P 500 dropped 0.91% and the Nasdaq Composite 0.53%.
Meanwhile, the yuan hit a nine-month low as the lockdown in Shanghai hit China’s growth prospects.
US Federal Reserve Chairman Jerome Powell said Thursday that a half-point rate hike would be “on the table” at the Fed’s meeting in May, adding it would be appropriate to “move a little more quickly”.
European Central Bank officials said on Thursday that the central bank could start raising euro area rates as early as July, while Bank of England interest rate-setter Catherine Mann said borrowing costs should probably rise further.
“The Fed, the ECB and the Bank of England were pushing for sharp comments on the markets and the markets have responded,” said Monica Defend, head of the Amundi Institute.
“As for the euro area, we are more skeptical of the fragility of the economic cycle, with Germany and Italy with great potential for recession.”
MSCI’s world equity index was down 1.07% at its lowest level since mid-March.
Selling pressure continued in bond markets, as both the five-year US Treasury yield and the two-year yield rose to their highest levels since late 2018.
The yield on the benchmark 10-year Treasury bond stood at 2.9064%. [US/]
European shares were down 1.56%, while France’s CAC 40 was down 1.54% from Sunday’s presidential vote. 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 cut its forecast for the currency on Friday, adding to an increasingly dismal view on the yuan among top investment banks.
The dollar was stable at 128.35 yen after talk of a joint Japan-US FX intervention. The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.43%, hitting a two-year high.
Oil prices weakened, interest rates hiked, weak global growth and the COVID-19 lockdown in China hit demand, even as the European Union imposed sanctions on Russian oil. [O/R]
Brent crude was down 1.05% at $107.16 a barrel, while US West Texas Intermediate (WTI) crude was down 1.16% at $102.52.
The price of oil has been increasingly volatile in recent months.
Since the creation of the Brent futures contract, there have been only 29 days where the spread between the intra-day high and low was $8 a barrel or more. Of these, 16 have happened this year.
Spot gold fell 0.32% to $1,945.36 an ounce.
This story has been published without modification in text from a wire agency feed.