Global stocks fell to a two-year low, while US index futures struggled to find direction, amid concerns that aggressive policies by global central banks would trigger a recession and a contraction in equities. Profits. The pound rose as the UK withdrew a plan to abolish the top income tax rate.
December contracts on the S&P 500 Index were little changed, while similar futures on the Nasdaq 100 fell 0.5 percent. European stocks fell as the region’s energy crisis intensified. Oil jumped on signs that the OPEC+ alliance could opt for a production cut. Shares of Credit Suisse Group AG hit record lows as traders continued to speculate on its future. A Brazil-linked exchange-traded fund rallied in Paris after the nation’s presidential race ended in a runoff.
World markets are nervous about the impact of monetary tightening on the economy after central banks, including the Federal Reserve, reiterated their determination to contain runaway inflation. US stocks posted their third consecutive quarter of losses for the first time since 2009 since the Federal Reserve delivered a third huge gain last month. Traders now await US jobs data later this week to gauge the path of the economy and Fed policy.
“The Fed is actively trying to tighten financial conditions and weaker equity markets is one way to get there,” said Colin Asher, senior economist at Mizuho Bank Ltd. in London. “Because inflation is so high, central banks will be wary of declaring victory for the time being.”
The pound and Credit Suisse shares were at the center of European trading. The British currency rallied after UK Chancellor of the Exchequer Kwasi Kwarteng withdrew a proposal to abolish the top tax rate of 45 percent.
Investors also waited to see how Brazil-linked assets move after the country’s presidential election headed for a runoff on Oct. 30. An early indication came from the Lyxor MSCI Brazil ETF in Paris, which had the biggest jump since July 7.
Credit Suisse fell 9 percent in Zurich even after Chief Executive Ulrich Koerner said the bank has a strong capital base. Speculation about the company’s future and its need for fresh capital continued to mount.
Global inflation fears were further fueled as West Texas Intermediate oil rose above $83 a barrel on signs the OPEC+ alliance is considering cutting output by more than 1 million barrels a day when it meets this week. .
Stocks made small gains in Japan and fell in Hong Kong and Australia. Trade in Asia was muted with a week-long closure of Chinese markets for Golden Week and the holidays in South Korea and Sydney.
Investors now await this week’s jobs data for more clues about the Fed’s rate hike trajectory. Upcoming inflation and GDP readings will also provide details on whether price pressures are easing significantly. Rate decisions are also expected in Australia and New Zealand, with these economies seen as benchmarks for developed market peers.
Key events this week:
- US Construction Spending, ISM Manufacturing, Light Vehicle Sales, Monday
- Fed’s Raphael Bostic and John Williams speak at events Monday
- Eurozone and EU finance ministers meet on Monday
- Eurozone PPI Tuesday
- US Factory Orders Durable Goods Tuesday
- Fed’s John Williams, Lorie Logan, Loretta Mester and Mary Daly speak at events Tuesday
- Eurozone services PMI, Wednesday
- OPEC+ meeting starts on Wednesday
- Fed’s Raphael Bostic speaks, Wednesday
- Eurozone retail sales, Thursday
- Initial jobless claims in the US, Thursday
- Fed’s Charles Evans, Lisa Cook and Loretta Mester speak at events Thursday
- US Unemployment, Wholesale Inventories, Non-Farm Payrolls, Friday
- BOE Lieutenant Governor Dave Ramsden speaks at an event on Friday
- Fed’s John Williams speaks at an event on Friday
Key Market Moves:
- The Stoxx Europe 600 was down 1.3% at 9:41am London time.
- S&P 500 futures were little changed
- Nasdaq 100 futures fell 0.5%
- Dow Jones Industrial Average futures rose 0.2%
- MSCI Asia Pacific Index fell 0.3 percent
- MSCI Emerging Markets Index falls 0.8%
- The Bloomberg Dollar Spot Index fell 0.2 percent
- The euro rose 0.2 percent to $0.9821.
- The Japanese yen fell 0.2% to 145.01 per dollar
- The offshore yuan rose 0.1% to 7.1341 per dollar
- Sterling rose 0.6% to $1.1237
- Bitcoin fell 0.2 percent to $19,203.51
- Ether fell 0.9% to $1,291.77
- The 10-year Treasury bond yield fell four basis points to 3.79 percent.
- Germany’s 10-year yield advanced one basis point to 2.12%
UK 10-year bond yields fell four basis points to 4.06%
Brent crude rose 4.3% to $88.77 a barrel.
Spot gold rose 0.2% to $1,664.68 an ounce.