August 10, 2022

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Asian stocks fell to their lowest level in two years, the euro moved closer to the dollar on growth fears

Asian stocks fell to their lowest level in two years, the euro moved closer to the dollar on growth fears

HONG KONG (Reuters) – Global stocks tumbled, oil tumbled and the euro edged closer to safe-haven parity on Tuesday, as the prospect of central banks tightening, a renewed outbreak of the coronavirus in China and energy shortages in Europe frightened investors. .

MSCI’s broadest index of Asia Pacific shares outside Japan (MIAPJ0000PUS.) It fell 1.3% to a two-year low, while Japan’s Nikkei fell (.N225) lost 2%.

Futures also indicated an open week in the US and Europe, with the US S&P 500 e-minis losing 0.6%, Nasdaq futures dropping 0.7%, the Eurozone Stoxx 50 futures dropping 0.8% and the index futures dropping 0.8%. FTSE by 0.44%.

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The euro fell to as low as $1.0005 against the US dollar, closer than ever to parity for the first time since December 2002, as investors fear the energy crisis will push the region into recession.

“Risk sentiment is dominating global markets,” said Yuting Shao, macro strategist at State Street Global Markets.

“The dollar is the international reserve currency. So when there is a risk of recession or a spike in volatility, the US currency is the currency that people rush to because it is the safest,” Chao added.

The dollar index, which measures the currency against six currency pairs, rose to 108.44, the highest level since October 2002.

The focus for this week will be on macro data including Wednesday’s US consumer inflation, and comments from Federal Reserve officials as investors look for clues on the outcome of the Fed’s upcoming policy meeting before officials enter a pre-meeting blackout period.

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The higher inflation reading may add pressure on the Fed to increase its already aggressive pace of rate hikes.

Also high on the list of investors’ concerns is the fact that a growing number of Chinese cities, including the Shanghai mall, are adopting new COVID-19 restrictions starting this week to curb new infections after a high-transmission Omicron variant was found. Read more

In the early afternoon, the Hang Seng benchmark index appeared in Hong Kong (.HSI) It fell 1.21% to its lowest since June 17, while mainland China stock CSI300 . fell (.CSI300) lost 1.3%.

In addition, the rising cost of energy in Europe is a major concern as the largest single pipeline carrying Russian natural gas to Germany has entered annual maintenance, with flows expected to stop for 10 days.

Investors are concerned that the war in Ukraine could extend the shutdown, further restricting European gas supplies and pushing the faltering eurozone economy into recession. Read more

The yield on the benchmark 10-year Treasuries was 2.9955%, after falling below 3% overnight as investors bought into safe-haven Treasuries amid a massive sell-off on Wall Street.

Growth concerns were also weighing on oil, despite concerns about tight supply.

Brent crude futures fell $1.35, or 1.3%, to $105.75 a barrel, while US West Texas Intermediate crude recorded $102.64 a barrel, down $1.45, or 1.4%.

Gold was a little lower. Spot gold was trading at $1,728.98 an ounce.

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