- US stock futures fell and the dollar rose 0.12% as investors awaited Friday’s inflation figures.
- Rate hikes are back on investors’ minds after Australia’s central bank rose more than expected.
- European stocks led a global selloff, although Britain’s FTSE 100 barely reacted to Boris Johnson surviving a vote of confidence.
Stock markets fell around the world on Tuesday as investors once again found themselves grappling with the potential impact of aggressive rate hike cycles.
The Reserve Bank of Australia was surprisingly hawkish, raising rates by 50 basis points to 0.85%. Several analysts are also predicting a similar sized hike from the European Central Bank later this week, while Friday’s US inflation data will likely influence
policy over the next few months.
US stocks are expected to trade lower, with tech stocks leading the sell-off. Nasdaq 100 futures fell 0.64%, while the S&P 500 and Dow Jones Industrial Average both fell 0.49% in European trading.
Yields on the 10-year US Treasury held above 3% on Tuesday, after rising above that level for the first time in a month the previous day. The 10-year note was last at 3.02%, down 1 basis point on the day. The dollar was the biggest beneficiary as stocks sold and yields held up 0.12%.
“There have been a few catalysts behind these upside moves, but one of the main ones over the past week and a half has been the perception that in the short term
the risks are receding again, which should give central banks the space to continue raising rates and thereby push bond yields higher,” said Deutsche Bank Chief Executive Jim Reid.
Global equities also struggled, with the MSCI World Index falling around 0.32%. Europe was the driver of the decline, with the STOXX 600 falling 0.41% and Frankfurt’s DAX 40 0.69%.
In the UK, Boris Johnson narrowly survived a leadership vote and will continue as Prime Minister for now. Markets shrugged off the political news, with the FTSE 100 down just 0.15% and the pound down just 0.2% against the dollar and euro.
“Political unrest is sure to leave its mark on UK investor confidence, but the extent of any market move will depend on how quickly the saga actually gets to bed,” analyst Sophie Lund-Jones said. main shares at the British broker Hargreaves. -Lansdown, said. “There are still a lot of uncertainties hanging over the stability of the current government, and until that nervousness subsides, the market will struggle to find its footing.”
Australian stocks were the most obvious losers from the RBA’s 50-point rise, with the All-Australian 50 falling 1.56%. Other Asian stocks weathered the storm, with Japan’s Nikkei 225 and China’s Shanghai Composite posting gains of 0.10% and 0.17% respectively, although Hong Kong’s Hang Seng fell 0. .58%.
The exit from riskier assets favored gold, which rose 0.16% to $1,846.60 an ounce. Bitcoin fell 5.91% to $29,597, after surging above $30,000 for the first time in nearly a week on Monday.