Global markets remained on edge Tuesday as investors braced for a heightened risk of global recession, even as dip buyers emerged.
Most stocks rose as Goldman Sachs Group Inc. and BlackRock Inc. soured on equities for the short term and Citigroup Inc. said bearish positioning continues to rise. Tech giants including Apple Inc., Amazon.com Inc., and Alphabet Inc. advanced more than 1% in premarket trading as US index futures rebounded with Europe’s Stoxx 600.
Pressure on bonds eased after the worst selloff in decades, with the benchmark 10-year Treasury yield retreating from the highest level since 2010. The dollar gauge held near a record high set Monday, when Federal Reserve officials repeated hawkish comments on policy.
UK markets clawed back some losses after a meltdown triggered by the government’s fiscal plan late last week. Gilt yields slid following the biggest-ever surge and the pound rose about 1% after falling to a record low.
Still, the country’s stock and bond markets have lost at least $500 billion in combined value since Liz Truss took over as Prime Minister and traders remained wary of the risk that the currency could slump to parity with the dollar after the Bank of England indicated it may not act before November to stem the rout.
Volatility across markets was also reflected by the risk of future price swings, which reached the highest since the beginning of the pandemic, as shown by a Bank of America index.
Meanwhile, Germany suspects the damage to the Nord Stream pipeline system used to transport Russian gas to Europe was the result of sabotage. Benchmark European gas prices climbed as much as 12% on Tuesday, after four days of losses. Oil and gold also rose.
The turmoil in markets shows little sign of turning Fed officials away from hawkish rhetoric. Boston Fed President Susan Collins and her Cleveland counterpart Loretta Mester said additional tightening is needed to rein in stubbornly high inflation and Atlanta Fed President Raphael Bostic also said the central bank still has a ways to go to control inflation.
“The market is pricing in some Fed increases, but we’re a bit worried that it might not be pricing in everything,” Laila Pence, president of Pence Wealth Management, said on Bloomberg Television. “Everyone is nervous.”
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Key events this week:
- US new home sales, Conference Board consumer confidence, durable goods, Tuesday
- Fed Chair Jerome Powell and Charles Evans speak at events, Tuesday
- Fed’s Mary Daly, Rafael Bostic, Charles Evans, and ECB President Christine Lagarde speak at events, Wednesday
- Eurozone economic confidence, consumer confidence, Germany CPI, Thursday
- US initial jobless claims, GDP, Thursday
- Fed’s Loretta Mester and Mary Daly speak at events, Thursday
- China PMI, Friday
- Eurozone CPI, unemployment, Friday
- US consumer income, University of Michigan consumer sentiment, Friday
- Fed’s Lael Brainard and John Williams speak, Friday
Some of the main moves in markets:
- Futures on the S&P 500 rose 1.1% as of 7:15 a.m. New York time
- Futures on the Nasdaq 100 rose 1.3%
- Futures on the Dow Jones Industrial Average rose 0.9%
- The Stoxx Europe 600 rose 0.6%
- The MSCI World index fell 1.3%
- The Bloomberg Dollar Spot Index fell 0.3%
- The euro rose 0.2% to $0.9628
- The British pound rose 1.1% to $1.0803
- The Japanese yen rose 0.3% to 144.38 per dollar
- Bitcoin rose 5.7% to $20,196.93
- Ether rose 4.4% to $1,383.59
- The yield on 10-year Treasuries declined 12 basis points to 3.81%
- Germany’s 10-year yield declined six basis points to 2.06%
- Britain’s 10-year yield declined nine basis points to 4.15%
- West Texas Intermediate crude rose 1.3% to $77.73 a barrel
- Gold futures rose 0.7% to $1,644.50 an ounce
Source By: Bloomberg