September 29, 2022

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Stocks slipped, the dollar stabilized as the market mood darkened

Stocks slipped, the dollar stabilized as the market mood darkened
  • European stock index reached its lowest level in four weeks
  • Analysts see Fed sticking to hawkish tone
  • US peak rate forecast creeps higher, dollar gains
  • New volatility hit real estate stocks in China

SINGAPORE/HONG KONG (Reuters) – Stock markets fell on Wednesday and the dollar held steady its recent gains as bad economic data from around the world took a hit on investor sentiment and fading hopes of a less aggressive pace from the central bank. Rising prices.

European Stock Index STOXX 600 (.stoxx) It touched a four-week low and was last down 0.2% while the UK FTSE was lower (.FTSE) It lost 0.9%, extending the weakness of Asian stocks earlier in the day. (MIAPJ0000PUS.)And the (.N225)

US S&P00 futures are down 0.3%.

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Wednesday was fairly quiet on the data front, but the previous day’s weak economic activity reports from the Eurozone – which reported a second straight month of contraction – the US and Japan continued to hurt appetite for riskier assets, such as stocks. Read more

Investors’ attention is also turning to the central bank’s Jackson Hole seminar starting Thursday, with a special focus on Federal Reserve Chairman Jerome Powell’s comments on Friday. Read more

Recent market moves have been due to “a combination of the Fed and central banks sticking to their inflation mandate, at the same time recent economic indicators are showing signs of weakness not only in Europe, but in the United States and Japan as well.” said Tai Hui, chief market strategist for Asia at JPMorgan Asset Management.

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European benchmark gas prices, which tripled in just over two months, didn’t help either.

“Maybe two or three weeks ago, the markets were thinking that the Fed might finish raising rates by the end of this year and cut rates in 2023, and that sequence of events now doesn’t seem to be happening,” Howe said, noting that this has led to It pushed the yield on the benchmark 10-year US Treasury above 3% early this week.

Traders have been raising their expectations of where the Fed funds rate may peak, with current rates pointing to around 3.7% in the middle of 2023.

The US 10-year bond yield was another 3.0499% while the German 10-year government bond yield touched an 8-week high of 1.38%.

China slice

The US dollar, which was supported by higher interest rate expectations, also benefited from weak comparative expectations in other parts of the world.

On Wednesday, the euro was trading at $0.9956 after falling to $0.99005 on Tuesday, and it was also struggling against the pound at 84.14 pence, despite the pound’s difficulties.

Meanwhile, property stocks in China tumbled as earnings brought another reminder of the deep chasm that developers live in without easy access to credit. Index of construction companies listed in Hong Kong (.HSCIPC) It fell to its lowest level in 10 years.

“People are still trying to understand the full extent of the adverse effects as it has multiple ramifications,” said Samuel Siew, market specialist at CGS-CIMB in Singapore.

“It’s still very difficult to fully gauge the severity of the situation. That’s what the markets are trying to decipher, and whether continued support is sufficient.”

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Oil recovered from early losses. Brent crude futures rose 0.7% to $100.9 a barrel – still weighed down by talk of Saudi supply cuts. US crude futures rose 1% to $94.75.

Spot gold settled at $1,747 an ounce. Bitcoin still bears the scars from last weekend’s sudden slide, at $21,300.

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Editing by Ana Nicholas da Costa, Jimmy Freed and Thomas Janowski

Our criteria: Thomson Reuters Trust Principles.