U.S. stocks hit their longest quarterly losses since the market crash of 2008, weighed down by central banks’ determination to control inflation through higher interest rates.
The blue-chip S&P 500 index fell 1.5 percent on Friday, bringing the June-to-September quarter to a 5.3 percent loss. The S&P has now fallen for three quarters in a row, the most since the prolonged bear market that coincided with the global financial crisis.
The tech-heavy Nasdaq Composite fell 1.5 percent on Friday, down 4.1 percent in the quarter to July 2020 and hitting the index’s worst close.
The sell-off in US assets continued later this week The Bank of England intervened To ease volatility in the UK government debt market.
Stock markets have had a tough year as central banks, including the U.S. Federal Reserve, have signaled they will continue to raise interest rates and cut support for economic growth in an effort to control inflation. Lael Brainard, vice president, Friday morning He reiterated this pointWhile the Fed was aware of the market turmoil, it acknowledged that it remained committed to tighter monetary policy.
Peter Dichir, head of macro strategy at Academy Securities, said investors agree with the central bank’s commitment to cooling inflation, even as stocks take a hit in the process.
“Today, I think the market realizes that the economy is slowing rapidly, but the Fed will do nothing to stop it. As volatility in the gilt and liquidity worsens across all markets in the U.S., more investors are nervous about the potential for a quick, big pullback in stock and bond prices,” Tchir said. said.
Emmanuel Gao, head of European equity strategy at Barclays, said: “Central bankers are telling us they’re going to rein in inflation, and it’s going to come. [the] At the cost of the economy, we don’t care about the markets right now.
U.S. Treasuries sold off on Friday, but remained above early week lows. Prices fell after the UK announced £45bn of unfunded tax cuts last Friday and Monday. UK and US bonds later firmed after the BoE intervened this week with a new plan to buy long-term debt.
The yield on the 10-year U.S. Treasury note, a global benchmark for borrowing, broke above 4 percent on Wednesday for the first time since 2010, rising 0.03 percentage points to 3.81 percent. As their prices fall, yields rise.
But despite some recovery in Treasury debt after the BoE’s intervention, the rapid tightening of monetary policy this year has seen both the two-year benchmark and the 10-year benchmark highly sensitive to policy expectations. -Offs in the record.
On Friday, the yield on UK 10-year debt fell 0.05 percentage points to 4.08 percent. UK yields across all maturities have moved by historic levels in recent sessions, with the 10-year rising more than 0.4 percentage points on Monday and falling almost 0.5 percentage points on Wednesday.
Cau said central bankers were having difficulty telling the market that the BoE’s move should not be seen as the start of a broader return to supportive policy. “The [Federal Reserve] What the BoE is doing should be seen in isolation, and it’s pretty clear that the central bank is going to stick to its plan. The [European Central Bank] It does the same,” he added.
London’s FTSE 100 added 0.2 percent on Friday, while Europe’s regional Stoxx 600 rose 1.3 percent.
In Asian stocks, Japan’s TOPIX index fell 1.8 percent on Friday. China’s CSI 300 index of Shanghai- and Shenzhen-listed shares fell 0.6 percent, while Hong Kong’s Hang Seng added 0.3 percent.
Additional reporting by Hudson Lockett in Hong Kong
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