16.8 C
HomeUncategorizedGlobal finance is on fire because of fear of inflation

Global finance is on fire because of fear of inflation

Asian, European stocks, bonds, and cryptocurrencies are all being sold off because investors are concerned about the impact of policies to deal with inflation.

European stock markets, which just opened this afternoon, joined the wave of global sell-offs. The Stoxx 600 Index fell 1.3%, to its lowest level since early March. The FTSE 100 (UK) is now down 1.46%. CAC 40 (France) and DAX (Germany) lost 2.36% and 2% respectively.

In Asia, Nikkei 225 (Japan) today closed down 3%. Kospi (South Korea) down 3.52%. Hang Seng Index (Hong Kong) lost 3.2%. Two Chinese market indexes – the Shanghai Composite and the Shenzhen Composite – also fell 0.9% and 0.3%, respectively.

Global stocks and bonds are selling off on concerns that inflation could prompt global central banks to raise interest rates, which in turn slows the economy. Besides, the Covid-19 situation in China also weighed heavily on investor sentiment.

In the US, the main indexes plunged last week after data showed that inflation in May hit a new 40-year high at 8.6%. Closing the session on June 10, the DJIA lost 880 points, or 2.73%. The S&P 500 fell 2.91%. The biggest drop was the Nasdaq Composite, with 3.52%.

This afternoon, S&P 500 futures are now down as much as 2.1% and Nasdaq 100 futures are down 2.5%. The 10-year US government bond yield touched 3.24% – the highest since October 2018.

The sell-off in European government bonds also accelerated, with the yield on two-year German government bonds rising above 1% for the first time in more than a decade.

“At some point, financial conditions will tighten to the point where growth weakens and the Fed stops raising rates,” said strategists at Goldman Sachs Group. That means bond yields are likely to continue to rise, risk assets will continue to come under pressure, and the US dollar will remain strong.”

Yields on US government bonds are rising with all maturities, especially short-term ones. Yields for two-years were at their highest since late 2007. Meanwhile, yields for 30-years are lower than those for five-years, indicating the risk of a Fed rate hike causing a hard landing for the US economy. .

The Japanese yen price today fell to a 24-year low against the USD. Prices of oil and iron ore – commodities sensitive to growth – continue to fall.

The pessimism also spread to the cryptocurrency market. Bitcoin this morning fell below $25,000 – an 18-month low.

Many investors expect the US Federal Reserve (Fed) to raise interest rates by 0.5% in the July and September meetings. Barclays and Jefferies even think that the June meeting is likely to witness a hike. 0.75% profit.

Ha Thu (according to Bloomberg, CNBC)

latest articles

explore more


Please enter your comment!
Please enter your name here