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Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn
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Graphic: World FX rates http://tmsnrt.rs/2egbfVh
(Updates after U.S. open, adds commentary, NEW YORK dateline)
LONDON/NEW YORK, Oct 11 (Reuters) – MSCI’s global index
of stocks hit its lowest level in almost two years on Tuesday
while oil prices sank on fears about the potential for a global
recession as central banks rapidly increase interest rates in an
effort to tame inflation.
Adding to pressure were concerns about the upcoming third
quarter earnings season and a U.S. inflation report, along with
escalation in the Russia-Ukraine war and COVID-19 cases in
China.
In addition, the International Monetary Fund on Tuesday
warned of a disorderly repricing in markets, saying global
financial stability risks have increased, raising the risks of
contagion and spillovers of stress between markets.
U.S.-led NATO said member states were boosting security as
G7 leaders condemned Russia’s escalating attacks in Ukraine.
Russian missiles pounded Ukraine for a second straight day,
after dozens of air raids on Monday that killed 19 people,
wounded more than 100 and cut power supplies.
“It’s just the consistent lack of good news. Russia’s
increased attacks on Ukraine is probably the larger story, but
the continued fear about inflation and the concern about coming
earnings numbers are all weighing on the market,” said Rick
Meckler, partner at Cherry Lane Investments.
The Dow Jones Industrial Average rose 41.48 points,
or 0.14%, to 29,244.36; the S&P 500 lost 24.5 points, or
0.68%, to 3,587.89; and the Nasdaq Composite dropped
117.27 points, or 1.11%, to 10,424.83.
The pan-European STOXX 600 index lost 0.70% and
MSCI’s gauge of stocks across the globe was down
1.00%. Earlier in the session, the MSCI index had fallen 1.5% to
549.19, its lowest level since Oct. 30, 2020.
Emerging market stocks were down 2.25% after
hitting their lowest level since April 2020 and are on track for
a near-30% tumble year-to-date, its biggest annual decline since
the 2008 global financial crisis.
Exacerbating global growth worries was news from China that
Shanghai and other big Chinese cities have ramped up testing for
COVID-19 as infections rise, with some local authorities hastily
closing schools, entertainment venues and tourist spots.
GILT RESPITE
Also impacting the global market was the Bank of England’s
latest efforts to shore up the battered bond market.
Citing a “material risk” to financial stability, the BoE
said it would buy up to 5 billion pounds of index-linked debt
per day from Tuesday until the end of the week.
Bonds globally have been sideswiped by the rout in UK
government bonds, known as gilts, pushing yields on U.S.
Treasuries up sharply on fears that UK pension funds were being
forced into fire sales of assets.
Benchmark 10-year notes were up 2.5 basis points
to 3.910%, from 3.885% late on Friday. The 30-year bond
last fell 28/32 in price to yield 3.8963%, from
3.842%. The 2-year note last rose 2/32 in price to
yield 4.2786%, from 4.308%.
The U.S. dollar edged higher in choppy trading, adding to
recent gains ahead of a key inflation report later this week
that is expected to show persistently strong price pressures.
Overall, dollar sentiment has remained positive as worries
about rising interest rates and geopolitical tensions have
unsettled investors, while Japan’s yen hovered near the level
that prompted last month’s intervention.
In currencies the euro was up 0.05% against the
dollar at $0.9705. The Japanese yen was flat versus the
greenback at 145.70 per dollar, while Sterling was last
trading at $1.108, up 0.23% on the day.
Japanese Finance Minister Shunichi Suzuki said the United
States showed understanding to “a certain extent” on Tokyo’s
currency market intervention last month, giving Japan’s first
public indication of U.S. backing for the move.
In commodities oil prices fell, extending the previous
session’s decline, as recession fears and a flare-up in COVID-19
cases in China raised concerns over global demand.
U.S. crude recently fell 1.6% to $89.67 per barrel
and Brent was at $94.67, down 1.58% on the day.
Gold wobbled near a one-week low with price moves restrained
as investors sat tight before the upcoming U.S. inflation report
that is expected to reinforce the Federal Reserve’s bullish
stance.
Spot gold added 0.1% to $1,669.50 an ounce. U.S. gold
futures gained 0.26% to $1,671.60 an ounce.
(Reporting by Sinéad Carew in New York, Dhara Ranasinghe in
London; Additional reporting by Bansari Mayur Kamdar in
Bengaluru, Samuel Indyk in London ; Editing by Jacqueline Wong
and David Evans)
Read More: Stocks tumble globally on raft of economic, political worries