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Global Equity Rout Deepens as Rate Fears Grow: Markets Wrap

Stock MarketsFeb 04, 2018 06:59PM ET
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(Bloomberg) -- Asian equities fell with Dow Jones Industrial Average futures tumbling almost 1 percent as the biggest rout for global stocks in two years and surging government bond yields kept investors questioning the speed of monetary policy tightening. The dollar extended gains.

Equity indexes in Australia and New Zealand sank at least 1 percent, while futures on the S&P 500 Index were 0.7 percent lower and losses were expected in Japan and Hong Kong. The gauge of U.S. shares tumbled 2.1 percent Friday and the 10-year Treasury yield rose above 2.85 percent following solid jobs data showing rising wages and a hint from Dallas Fed President Robert Kaplan that the Federal Reserve may need to lift interest rates more than three times this year.

Anxiety about the outlook for monetary policy is reaching fever pitch with equities being tested by the surge in bond rates -- yields on 10-year Treasuries have climbed to a four-year high from 2.40 percent at the start of the year. Last week’s decline for global stocks follows one of the best starts to a year on record amid hopes for ever-expanding corporate profits and growth in the world economy that’s broadening.

Elsewhere, Bitcoin extended losses over the weekend, heading toward $8,000.

Terminal users can read more in our markets blog.

Here are some key events scheduled for this week:

  • Monetary policy decisions are due in Australia, Russia, India, Brazil, Poland, Romania, the U.K., New Zealand, Serbia, Peru, and the Philippines.
  • Earnings season continues with reports from Bristol-Myers Squibb, Ryanair, Toyota Motor Corp., BNP Paribas (PA:BNPP), BP (LON:BP), General Motors (NYSE:GM), Walt Disney, SoftBank, Sanofi (PA:SASY), Philip Morris, Total, Tesla (NASDAQ:TSLA), Rio Tinto (LON:RIO), L’Oreal and Twitter.
  • Dallas Fed’s Kaplan and New York Fed President William Dudley are among policy officials due to speak in New York.

These are the main moves in markets:

Stocks

  • Futures on Japan’s Nikkei 225 Stock Average sank 1.4 percent in late Friday trading in Chicago.
  • Australia’s S&P/ASX 200 Index dropped 1.3 percent and New Zealand’s S&P/NZX 50 Index sank 1.5 percent.
  • Contracts on Hong Kong’s Hang Seng Index declined 1.3 percent.
  • The MSCI Asia-Pacific Index fell 0.3 percent.
  • The MSCI All-Country World Index lost 3.4 percent last week.

Currencies

  • The dollar extended gains versus most major developed market peers.
  • The euro declined 0.2 percent to $1.2434.
  • The pound fell 0.2 percent to $1.4092.
  • The Aussie dropped 0.4 percent to 79.01 U.S. cents.
  • The yen was little changed at 110.22 per dollar.

Bonds

  • The yield on 10-year Treasuries closed Friday up five basis points to 2.84 percent.
  • Australia’s 10-year bond yield rose about five basis points to 2.88 percent.

Commodities

  • West Texas Intermediate crude fell 0.5 percent to settle at $64.96 a barrel.
  • Gold lost 0.2 percent to $1,331.16 an ounce.

Global Equity Rout Deepens as Rate Fears Grow: Markets Wrap
 

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