Stocks, futures sink as dollar jumps with yields: Markets overview

(Bloomberg) — Federal Reserve Chairman Jerome Powell’s signal of higher, longer-term interest rates moved through markets Monday, sinking stocks and equity futures and pushing two-year Treasury yields to levels last seen in 2007 Mr.

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An index of Asian shares fell more than 2 percent, the most in more than two months. Losses on the Nasdaq 100 and European futures were at least 1.5%. Declines in China and Hong Kong were smaller amid progress on the US-China divestment dispute.

The Bloomberg Dollar Spot Index rose to a record high last month as investors sought refuge from sharp volatility. Commodity-linked currencies as well as the yen, pound and offshore yuan were under pressure.

Bonds sold off amid a deepening inversion of the US yield curve, underscoring expectations of a recession amid monetary tightening. US two-year yield, sensitive to Fed policy expectations, hits 3.45%

Powell, in his address last week at the Fed’s Jackson Hole symposium, noted the likely need for tighter monetary policy for some time to contain high inflation and cautioned against prematurely loosening monetary conditions. He also warned of the potential for economic pain for households and businesses.

Those comments contrasted with bets that U.S. borrowing costs will fall next year as growth slows. The site of much of the investor concern has been the equity market, further reversing the rebound of global stocks from the bear market lows of mid-June. Other risks include China’s slowdown and Europe’s energy crisis.

Powell signaled that “once they get to whatever the last hike is, they’re going to stay there for a while,” said Charles Schwab & Co.’s chief investment strategist. Liz Ann Saunders on Bloomberg TV. “The market had trouble absorbing that.”

Bitcoin broke below the $20,000 level, which some see as a marker of a deeper decline in investor sentiment. Gold fell but oil posted gains as traders assessed risks to crude supplies.

The relative resilience of China’s stock market may reflect optimism about a tentative deal between Beijing and Washington to ease a dispute over audit reviews of Chinese firms. An agreement is needed to prevent about 200 Chinese companies from delisting from US exchanges.

Here are some key events to watch this week:

  • US consumer confidence, Tuesday

  • New York Federal Reserve President John Williams will speak on Tuesday

  • ECB Governing Council members are due to speak at the event from Tuesday to September 2

  • China PMI, Wednesday

  • Eurozone CPI, Wednesday

  • Russia’s Gazprom will halt gas flows on the Nord Stream pipeline for three days of maintenance on Wednesday

  • Cleveland Federal Reserve President Loretta Mester is scheduled to speak on Wednesday

  • China Caixin manufacturing PMI, Thursday

  • US non-farm payrolls, Friday

  • The UK leadership vote closes on Friday. The winner is announced on September 5

Some of the major moves in the markets:

Stock up

  • S&P 500 futures were down 1.1 percent as of 10:47 a.m. in Tokyo. S&P 500 down 3.4%

  • Nasdaq 100 futures fell 1.5%. Nasdaq 100 lost 4.1%

  • Japan’s Topix index fell 2.1%

  • Australia’s S&P/ASX 200 lost 2%

  • South Korea’s Kospi down 2.3%

  • Hong Kong’s Hang Seng index fell 1%

  • China’s Shanghai Composite fell 0.4%

  • Euro Stoxx 50 futures fell 1.7%


  • The Bloomberg Dollar Spot index rose 0.5%

  • The euro was at $0.9927, down 0.4%

  • The Japanese yen was at 138.54 per dollar, down 0.6%

  • The offshore yuan was at 6.9258 per dollar, down 0.5%



  • West Texas Intermediate crude was at $93.74 a barrel, up 0.7%

  • Gold was at $1,726.88 an ounce, down 0.6%

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