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Stocks Fall, US Futures Wobble on Economic Jitters: Markets Wrap

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Stocks Fall, US Futures Wobble on Economic Jitters: Markets Wrap

Global stocks fell to a two-year low, while US index futures struggled for direction, amid concern hawkish policies by global central banks will spark a recession and earnings contraction.

December contracts on the S&P 500 Index were little changed, while similar futures on the Nasdaq 100 slid 0.3%. Carmaker Tesla tumbled 4% in premarket New York trading after deliveries in the third quarter fell short of expectations. Oil jumped on signals the OPEC+ alliance may opt for a production cut. In European trading, Credit Suisse Group AG’s shares hit record low as traders continued to speculate about its future.

Global markets remain jittery over the potential impact of monetary tightening on the economy after central banks, including the Federal Reserve, reiterated their resolve to contain runaway inflation. US stocks ended the previous quarter with a third straight quarter of losses for the first time since 2009 after the Federal Reserve delivered a third jumbo hike last month. Traders now await US jobs data later this week to gauge the path of the economy and Fed policy.

“The Fed is actively trying to tighten financial conditions and weaker equity markets is one way you get there,” said Colin Asher, a senior economist Mizuho Bank Ltd. in London. “Because inflation is so high central banks will be wary of declaring victory just yet.”

Inflation fears were further stoked by the renewed surge in oil prices, with West Texas Intermediate oil trading above $83 a barrel on indications that the OPEC+ alliance was considering slashing production by more than 1 million barrels a day when it meets this week.

In Europe, stocks fell as the region’s energy crisis threatened to escalate further. The pound and UK government bonds initially rallied after Chancellor of the Exchequer Kwasi Kwarteng withdrew a proposal to abolish the top 45% tax rate, before ceding some of those gains.

The other big focus was Switzerland’s Credit Suisse Group AG, which slumped more than 11% as speculation mounted about the company’s future and its requirement for fresh capital. The cost of insuring against exposure to the company surged to a record high as investors shrugged off Chief Executive Officer Ulrich Koerner’s efforts to calm the market.

Concern is also growing that central-bank policy tightening risks sending the global economy into recession and hitting corporate profits. EV maker Tesla offered a reminder of those risks, sliding after third-quarter deliveries fell short of expectations. Shares of fellow EV makers also came under pressure on fears that supply-chain snarls would dampen their efforts to ramp up production.

Investors also waited to see how Brazil-linked assets would fare after the country’s presidential election headed to a run-off vote on Oct. 30. An early indication came from the Lyxor MSCI Brazil ETF in Paris, which jumped the most since July 7.

Treasuries rose, paring the increase in yields witnessed in late trading on Friday. The 10-year rate shed almost 5 basis points.

Investors now await this week’s US jobs data for further clues about the Fed’s rate-hike trajectory. Central banks in Australia and New Zealand, considered bellwethers for developed market peers, are expected to extend their tightening cycles and raise rates by 25 basis points and 50 basis points respectively, according to Bloomberg Economics.

The Australian and New Zealand dollars strengthened 0.6% and 0.9% against the dollar respectively.

Key events this week:

US construction spending, ISM Manufacturing, light vehicle sales, Monday
Fed’s Raphael Bostic, John Williams speak at events, Monday
Euro-area and EU finance ministers meet, Monday
Eurozone PPI, Tuesday
US factory orders, durable goods, Tuesday
Fed’s John Williams, Lorie Logan, Loretta Mester, Mary Daly speak at events, Tuesday
Eurozone services PMIs, Wednesday
OPEC+ meeting begins, Wednesday
Fed’s Raphael Bostic speaks, Wednesday
Eurozone retail sales, Thursday
US initial jobless claims, Thursday
Fed’s Charles Evans, Lisa Cook, Loretta Mester speak at events, Thursday
US unemployment, wholesale inventories, nonfarm payrolls, Friday
BOE Deputy Governor Dave Ramsden speaks at event, Friday
Fed’s John Williams speaks at event, Friday

Key market moves:

Futures on the S&P 500 were little changed as of 6:15 a.m. New York time
Futures on the Nasdaq 100 fell 0.3%
Futures on the Dow Jones Industrial Average rose 0.3%
The Stoxx Europe 600 fell 0.8%
The MSCI World index fell 0.3%
The Bloomberg Dollar Spot Index rose 0.1%
The euro fell 0.4% to $0.9764
The British pound rose 0.2% to $1.1187
The Japanese yen fell 0.3% to 145.15 per dollar
Bitcoin fell 0.5% to $19,134.92
Ether fell 1% to $1,290.22
The yield on 10-year Treasuries declined five basis points to 3.78%
Germany’s 10-year yield was little changed at 2.11%
Britain’s 10-year yield declined two basis points to 4.08%
West Texas Intermediate crude rose 4.3% to $82.92 a barrel
Gold futures were little changed.

source :- bloomberg

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