Stock markets tumbled, the pound crashed against the dollar and oil prices
slumped Friday on growing recession fears after central banks this week ramped
up interest rates to fight decades-high inflation.
اضافة اعلان
With price rises showing no solid sign of letting up, monetary policymakers
have gone on the offensive, warning that short-term hits to economies are less
painful than the long-term effects of not acting.
The Federal Reserve's decision Wednesday to lift borrowing costs by 0.75
percentage points for a third successive meeting was followed by a warning that
more big rises were in the pipeline and that rates would likely come down only
in 2024.
There were similar moves by central banks in other countries including
Britain, Sweden, Norway, Switzerland, the Philippines and Indonesia -- all
pointing to a dark outlook for markets.
Wall Street extended losses Friday while European equities sank in afternoon
deals and Asia finished lower.
"A negative end to the week in Asia, and Europe has quickly followed as
the prospect of much more tightening and a recession weighs on sentiment,"
said Craig Erlam, analyst at trading platform OANDA.
In a sign that recession expectations are rising, the 10-year US Treasury
yield jumped to its highest level in a decade.
"It's a messy situation in the Treasury market to be sure and that is
creating a messy situation for stocks. However, it's not just a US situation.
Things are messy elsewhere," said Briefing.com analyst Patrick O'Hare.
The UK 10-year yield struck an 11-year high on Friday.
The British pound tumbled to a 37-year low under $1.10 as a tax-cutting
budget sparked public finance concerns while recession fears mounted.
"Equity markets are also plunging on concerns that this (UK) package
could further push inflation even higher, and thus make it more difficult to
bring back down," said Michael Hewson, chief market analyst at CMC Markets
UK.
In the eurozone, recession fears deepened as data showed its economic
activity fell once again in September.
The S&P eurozone PMI dropped to 48.2 in September -- with a score under
50 representing economic contraction.
The euro hit a new two-decade low at $0.9751.
"A eurozone recession is on the cards as companies report worsening
business conditions and intensifying price pressures linked to soaring energy
costs," said Chris Williamson, chief business economist at S&P Global
Market Intelligence.
He added that falling UK business activity this month indicates that the
British economy is likely already in recession.
Recession fears also caused oil prices to fall, with the main US contract,
WTI, falling below $80 for the first time since January.
Traders were keeping a close eye as well on developments following the
Japanese finance ministry's intervention to support the yen, after it hit
a new 24-year low of 146 against the dollar.
The first such intervention since 1998 helped strengthen the yen but it
remained above 140.
Analysts warned the move was unlikely to have much long-term impact and the
yen remained vulnerable owing to the Bank of Japan's refusal to tighten policy
-- citing a need to boost the economy.
- Key figures at
around 1435 GMT -
New York - Dow: DOWN 1.4 percent at 29,644.98 points
London - FTSE 100: DOWN 2.3 percent at 6,997.50
Frankfurt - DAX: DOWN 1.9 percent at 12,294.22
Paris - CAC 40: DOWN 2.3 percent at 5,782.79
EURO STOXX 50: DOWN 2.3 percent at 3,349.75
Hong Kong - Hang Seng Index: DOWN 1.2 percent at 17,933.27 (close)
Shanghai - Composite: DOWN 0.7 percent at 3,088.77 (close)
Tokyo - Nikkei 225: Closed for a holiday
Pound/dollar: DOWN at $1.0972 from $1.1252 Thursday
Euro/dollar: DOWN at $0.9726 from $0.9839
Euro/pound: UP at 88.65 pence from 87.40 pence
Dollar/yen: UP at 143.12 yen from 142.35 yen
West Texas Intermediate: DOWN 4.9 percent at $78.61 per barrel
Brent North Sea crude: DOWN 4.6 percent at $84.95 per barrel
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