The global sell-off in stocks continued on Tuesday as investors recalibrated their expectations of the Federal Reserve’s interest rate policy, which will underpin the financial health of households, businesses and governments around the world.
Stock indices of Japan, Taiwan, Australia, New Zealand, South Korea and the Philippines fell by almost 1% or more after Monday’s turbulent day on Wall Street. Stocks in Hong Kong and China also fell. In Europe, the benchmark Stox 600 index fell slightly in midday trading, extending his 1% decline on Monday.
Oil remains an outlier as prices rise after Saudi official’s announcement alluded to Regarding discontinuation of production.
U.S. stock futures oscillated between small gains and losses in premarket trading on Tuesday, suggesting it could be another volatile day for investors when markets open on Wall Street. .
The deal suggests that investors have so far receded from expectations that the Fed will be less aggressive on rate hikes due to recent data showing easing inflation in the US. Add to worries about the health of the global economy, and this shift in sentiment has sent the S&P 500 down his 2.1% on Monday, his worst one-day decline since mid-June.
“The smart thing to do is take risks and wait and see,” said Chetan Seth, Asia-Pacific equity strategist at Nomura Securities, referring to a meeting of central bankers in Jackson Hole, Wyoming, this week. ‘ said. The Fed chair is due to deliver a speech on Friday, and investors will look for clues as to whether the Fed will raise rates by another 3/4 percentage point at its September meeting or opt for a 0.5 percentage point hike.
But Powell is unlikely to hint at the Fed’s concrete plans for next month, Seth said. The Federal Reserve will wait to examine employment and inflation data due in the coming weeks before making a decision on the size of the rate hike, he added.Futures markets are rocking, but traders Barely hope now Interest rates will rise by three-quarters of a percentage point next month.
On Tuesday, a survey of business activity in the Eurozone S&P Global Showed 2nd month contractions. S&P Global said weaker demand and weaker confidence “meaning that firms have become increasingly reluctant to expand staffing and the rate of job creation has slowed to its slowest in almost a year and a half.” .
The euro extended Monday’s plunge against the dollar, falling just below par, a one-for-one exchange with the US currency. European natural gas prices fell slightly but remained near the previous day’s record highs after rising 13% amid fears Russia would further restrict oil and gas flows to Western Europe. rice field.
“Gas supplies are expected to be more disrupted towards the end of the year, energy prices will remain high and will weigh particularly heavily on the manufacturing sector, which is likely to be subject to energy rationing over the coming months, with some companies temporarily may close in 2020,” Melanie De Bono, senior European economist at Pantheon Macroeconomics, wrote in a research note.