Global stocks fell, bond yields rose and global currencies fell against the dollar on Monday as investors were horrified by hawkish comments from some of the world’s most powerful central banks. Did.
Japanese benchmark Topix lost the market, dropping almost 2%, while Hong Kong’s Hang Seng stock index fell 0.7%.
The pessimistic mood spread across Europe, with the Eurostox 600 benchmark dropping 1.2% in early trading. Germany’s Dax is down his 1% and Paris’ Cac 40 is down his 1.5%. London is closed for public holidays.
At the annual meeting of the world’s central banks in Jackson Hole, Federal Reserve Chairman Jay Powell warned that he would continue to raise interest rates to combat surging inflation even as the economy slowed.
Senior European policymakers also warned that monetary policy must remain tight in Europe for the long term. IMF Deputy Managing Director Gita Gopinath said: told the Financial Times Over the weekend, he said, “monetary policy decisions will become much more difficult” over the next five years as officials grapple with “the most costly trade-offs.”
Asian stocks fell following Friday’s bearish session on Wall Street where the S&P 500 fell 3.4% and the tech-focused Nasdaq Composite fell almost 4%.
These were the biggest drops in more than two months for both US stock benchmarks, followed by them. Comment from Powell During a speech at the annual meeting of central bankers in Jackson Hole, Wyoming. He argued that the Federal Reserve “must keep it up until the job is done,” and that it must curb rapid inflation by repeatedly raising interest rates.
“Restoring price stability will likely require maintaining a restrictive policy stance for the foreseeable future,” Powell added. “The historical record strongly cautions against easing policy prematurely.”
Powell’s speech spilled over into global markets on Monday, with policy-sensitive 2-year Treasury yields rising 0.07 percentage points to 3.466%, the highest level since 2007. Expectations for higher interest rates.
Bank of Singapore Chief Economist Mansur Mohiuddin said: “Officials remain committed to returning inflation to the central bank’s 2% target.” “I think there is a growing likelihood of a 0.75 percentage point rise next month, so I will be keeping a close eye on the US payrolls and consumer price index in August,” he said.
A new rate hike promise by Jackson Hole’s central bank also hit the forex market, with the Japanese yen depreciating 0.8% against the dollar to 138.66 yen, further exacerbating losses for traders in Tokyo.
In European currencies, the pound fell 0.8% to $1.166, its lowest level since the early days of the pandemic, as investors reacted to Goldman Sachs forecasts. Analysts at a US bank have forecast that the UK will enter a recession in the fourth quarter of her 2022, cutting annual economic growth forecasts to her 3.5% from her previous 3.7%.
Gold fell 0.9% to $1,721 an ounce, the lowest in a month.