Markets roiled by recession risk, rampant dollar



*

Asian stock markets : Link

*

Asia stocks ex-Japan hit 2-1/2 year low

*

U.S. benchmark yields top 4% for first time since 2010

*

Dollar index at 20-year high, squeezing emerging markets

*

Sterling slips anew as UK fiscal credibility shaken

By Wayne Cole

SYDNEY, Sept 28 (Reuters) - Asian share markets sank on Wednesday as surging borrowing costs intensified fears of a global recession, spooking investors into the arms of the safe-haven dollar and punishing currencies across the region.

Yields on U.S. 10-year Treasuries US10YT=TWEB were shoved above 4.0% for the first time since 2010 as markets wagered the Federal Reserve might have to take rates past 4.5% in its crusade against inflation. FEDWATCH

Sterling also came under renewed pressure as Moody's warned that unfunded UK tax cuts would be "negative" for the country's credit standing, deepening a damaging selloff in gilts.

"It is now clear that central banks in advanced economies will make the current tightening cycle the most aggressive in three decades," said Jennifer McKeown, head of global economics at Capital Economics.

"While this may be necessary to tame inflation, it will come at a significant economic cost.

"In short, we think the next year will look like a global recession, feel like a global recession, and maybe even quack like one, so that's what we're now calling it."

Surging rates and slowing growth is not a good mix for equities and MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 2.0% to its lowest since April 2020.

Japan's Nikkei .N225 shed 2.2% and South Korean stocks .KS11 fell 2.9% to a two-year low. Chinese blue chips lost 1.2%.

S&P 500 futures ESc1 got caught in the bearish mood and slipped 0.6%, while Nasdaq futures NQc1 dropped 0.9%. This would be the S&P 500's seventh session of losses and threaten the technically-important 200-week average at 3,590.

EUROSTOXX 50 futures STXEc1 fell 1.1%, as did FTSE futures FFIc1 as European borrowing costs blew out.

"European sovereign yields have soared to multi-year highs amid concerns about UK policy-making and a right-ward shift of Italian politics in the midst of still elevated inflation," wrote analysts at JPMorgan in a note.

"The Italian 10-year spread to the German Bund has eclipsed 250bp, well above the 200bp mark we believe makes the ECB uncomfortable."

Shaking investor confidence has been the collapse in sterling and UK bond prices, which could force some fund managers to sell other assets to cover losses.

Underlining the risk of yet higher interest rates, the chief economist at the Bank of England said the tax cuts would likely require a "significant policy response". nL8N30Y43D

Moody's on Tuesday warned the UK government that large unfunded tax cuts were "credit negative" and could undermine the government's fiscal credibility.

MORE RISK PREMIUM, PLEASE

George Saravelos, global head of FX strategy at Deutsche Bank Research, said investors now wanted more to finance the country's deficits, including a 200-basis-point rate hike by November and a terminal rate up at 6%.

"This is the level of risk premium that the market now demands to stabilize the currency," said Saravelos. "If this isn't delivered, it risks further currency weakening, further imported inflation, and further tightening, a vicious cycle."

Sterling was under fire again at $1.0656 GBP=D3 , with its bounce from Monday's record trough of $1.0327 stopping far short of the $1.1300 level held before last week's UK Budget.

Yields on British 10-year gilts GB10YT=RR have risen a staggering 119 basis points in just four sessions to reach 4.50%, the sharpest such move since at least 1979.

The safe-haven dollar has been a major beneficiary from the rout in sterling, rising to a fresh 20-year peak of 114.680 =USD against a basket of currencies.

The dollar held at 144.70 yen JPY=EBS , testing the resolve of the Japanese authorities to protect the 145.00 level after last week's intervention.

The euro slipped anew to $0.9552 EUR=EBS and back toward last week's two-decade low of $0.9528.

The dollar also touched a record high on the offshore-traded Chinese yuan CNH= at 7.2387, having risen for eight straight sessions.

The mounting pressure on emerging market currencies from the dollar's rise is in turn adding to risks that those countries will have to keep lifting interest rates and undermine growth.

The ascent of the dollar and bond yields has also been a drag for gold, which was hovering at $1,624 an ounce XAU= after hitting lows not seen since April 2020.

Oil prices fell again as demand worries and the strong dollar offset support from U.S. production cuts caused by Hurricane Ian.

Brent LCOc1 fell $1.17 to $85.03 a barrel, while U.S. crude CLc1 lost $1.10 cents to $77.40 per barrel.



Asia stock markets Link
Asia-Pacific valuations Link



Reporting by Wayne Cole;
Editing by Shri Navaratnam and Kim Coghill



Isenção de Responsabilidade: As entidades do XM Group proporcionam serviço de apenas-execução e acesso à nossa plataforma online de negociação, permitindo a visualização e/ou uso do conteúdo disponível no website ou através deste, o que não se destina a alterar ou a expandir o supracitado. Tal acesso e uso estão sempre sujeitos a: (i) Termos e Condições; (ii) Avisos de Risco; e (iii) Termos de Responsabilidade. Este, é desta forma, fornecido como informação generalizada. Particularmente, por favor esteja ciente que os conteúdos da nossa plataforma online de negociação não constituem solicitação ou oferta para iniciar qualquer transação nos mercados financeiros. Negociar em qualquer mercado financeiro envolve um nível de risco significativo de perda do capital.

Todo o material publicado na nossa plataforma de negociação online tem apenas objetivos educacionais/informativos e não contém — e não deve ser considerado conter — conselhos e recomendações financeiras, de negociação ou fiscalidade de investimentos, registo de preços de negociação, oferta e solicitação de transação em qualquer instrumento financeiro ou promoção financeira não solicitada direcionadas a si.

Qual conteúdo obtido por uma terceira parte, assim como o conteúdo preparado pela XM, tais como, opiniões, pesquisa, análises, preços, outra informação ou links para websites de terceiras partes contidos neste website são prestados "no estado em que se encontram", como um comentário de mercado generalizado e não constitui conselho de investimento. Na medida em que qualquer conteúdo é construído como pesquisa de investimento, deve considerar e aceitar que este não tem como objetivo e nem foi preparado de acordo com os requisitos legais concebidos para promover a independência da pesquisa de investimento, desta forma, deve ser considerado material de marketing sob as leis e regulações relevantes. Por favor, certifique-se que leu e compreendeu a nossa Notificação sobre Pesquisa de Investimento não-independente e o Aviso de Risco, relativos à informação supracitada, os quais podem ser acedidos aqui.

Usamos cookies para lhe dar a melhor experiência no nosso website. Ler mais ou alterar as configurações de cookies.

Aviso de risco: O seu capital está em risco. Os produtos alavancados podem não ser adequados para todos. Recomendamos que consulte a nossa Divulgação de Riscos.