December 10, 2022
European stocks fall after quarterly fall

European stocks and US stock futures started the new month on a downbeat note, struggling to reverse course after Wall Street posted its longest streak of quarterly losses since the 2008 financial crisis.

Regional Stockx Europe 600 gauge fell 1.3 percent in early deals on Monday, while contracts tracking the S&P 500 fell 0.1 percent ahead of the New York opening. Hong Kong’s Hang Seng fell 0.9 per cent in Asian markets.

The moves came after the S&P closed 1.5 per cent lower on Friday, falling 5.3 per cent in the third quarter, as tensions from central banks led by the US Federal Reserve plunged equity markets, tightening the screws. . Monetary policy.

Stokes also closed its longest quarterly loss in 14 years.

Bruce Kasman, chief economist at JPMorgan Chase, said: “The increasingly tightening of US monetary conditions – rising lending rates and the dollar – has been conducive to building financial stress in the past and is now becoming a major vulnerability.” There has been a substantial increase in overall volatility and increased debt market tensions.

Shares of the European Bank, which are seen as particularly exposed to the health of the economy, fell 1 per cent in morning trading on Monday with the Stockx sub-index down. Credit Suisse was down 9 percent over the weekend after the Swiss bank reassured investors about its financial strength. Shares of French bank Société Générale fell more than 1 per cent.

The final week of the third quarter was characterized by significant volatility in UK assets, which spread to other global financial markets, after the Bank of England intervened to calm the trading turmoil in the country’s government debt.

The yield on the 10-year UK gilt fell 0.09 percentage points to 4 per cent at the start of the deal on Monday, after it emerged the government would end plans to slash the UK tax on high-income earners.

Gilts were doused in the trading sessions after Chancellor Quasi Quarteng’s “mini” budget on 23 September included £45bn in unfunded tax cuts, which is expected to be covered in large part by the issuance of government bonds. . After rising 30-year gilt yields by historical magnitude under extreme selling pressure, the BoE on Wednesday stepped up with a new program to buy long-term debt. As bond yields rise, their prices fall.

The yield on the benchmark US Treasury note also fell 0.02 per cent to 3.78 per cent on Monday, after a week-long sell-off from moves in UK markets.

Equity and government debt markets have fallen unusually this year, as the Fed continues to lead the charge of aggressively raising interest rates to tame high inflation. Concerns have intensified in recent months that the US central bank and its partners will raise the cost of borrowing so much that it will exacerbate a global recession.

Those fears have also driven volatility in the price of oil, which is dictated in part by demand expectations. Fears of an economic slowdown have pushed Brent crude below $90 a barrel, following international buoys earlier this year over concerns about supplies due to Russia’s full-scale invasion of Ukraine.

On Monday, Brent rose 3.2 percent to $87.83 a barrel, helped by news that the OPEC+ cartel of oil producers is planning substantial production cuts.

In currencies, the pound was up 0.1 per cent to $1.117 after news of the UK government’s change of direction on a higher tax rate. Last Monday, sterling fell to its lowest level at $1.035 against the dollar.

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