Wall Street and bond yields are falling as the UK and Switzerland raise rates

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US stock and bond yields fell as investor fears of a recession mounted after the US Federal Reserve’s biggest rate hike in nearly three decades.

Core items:

  • The Dow Jones was down 2.4% to 29,927, the S&P 500 was down 3.3% to 3,667 and the Nasdaq Composite was down 4.1% to 10,646
  • The FTSE 100 in London fell 3.1% to 7,045, Germany’s DAX fell 3.3% to 13,039 and the CAC 40 in Paris fell 2.4% to 5,886
  • The Australian dollar rose 0.6% to 70.5 cents, while the ASX SPI 200 fell 2.1% to 6,325 at 7:20 a.m. AEST.

The day after the rebound, when the US Federal Reserve increased its federal funds rate by 0.75 percent, Wall Street was a blight and all 11 sectors of the S&P 500 fell, driven by energy stocks.

The benchmark index suffered a sixth decline in seven trading sessions.

Rising interest rates in the UK and Switzerland have renewed concerns that central bank attempts to cool rising inflation could numb the global economy or trigger a recession.

Several investment banks have warned of recession risks, including Wells Fargo, Deutsche Bank and Morgan Stanley.

Spacebar to play or pause, M to mute audio, left and right arrows to search, up and down arrows to adjust volume. Tracking time: 17min 8sec 17min Recession risks rise as central banks slowly raise rates, Marc Faber (Kathryn Robinson) warns

The Dow Jones index fell 2.4 percent to 29,927, the S&P 500 fell 3.3 percent to 3,667 and the Nasdaq Composite fell 4.1 percent to 10,646.

It was the Nasdaq index’s fifth one-day drop of 4 percent or more since May’s bear market index.

Sharp tech declines, led by sharp falls in electric car maker Tesla (-8.5 percent) and computer games maker Nvidia (-9.3 percent).

“We just noticed that at the time [are] We’re reassessing today — the likelihood of a possible recession and whether corporate earnings will go where analysts predict or destroy them,” said global investment strategist Tom Hainlin of Ascent Private Wealth Group at US Bank Wealth Management.

“The Swiss came out today and surprised everyone and said: We’re less worried about the strength of our currency and more about inflation.”

US Treasury yields fell as fears of a recession weighed on investor risk and became a safe haven for Treasuries.

The benchmark 10-year yield (bond yield) fell to 3.307 percent after hitting 3.498 percent on Tuesday, the highest since April 2011.

Economic data has added to fears of slowing growth as the number of Americans filing new unemployment benefits fell less-than-expected last week.

And a Commerce Department report showed US housing construction that started last month fell 14.4 percent to its lowest level since April 2021.

The Australian dollar was up 7:20 AEST at 70.5 US cents, up 0.6 percent.

But the Australian stock market will fall the next day.

The ASX SPI 200 fell 2.1 percent to 6,325 at 7:20 a.m. AEST.

Rate increase in the UK

The Bank of England has hiked official interest rates by 0.25 percent for the fifth time since December, a day after the European Central Bank pledged support to indebted countries.

The UK central bank has hiked interest rates again despite fears of a sharp economic slowdown, with UK inflation reaching 10% this year.

The Swiss National Bank has raised interest rates by 50 basis points for the first time in 15 years.

The European stock markets were also a red plague.

The FTSE 100 in London fell 3.1 percent to 7,045, Germany’s DAX fell 3.3 percent to 13,039 and the CAC 40 in Paris fell 2.4 percent to 5,886.

Spot gold was up 1.3 percent to $1,857.09 an ounce, while Brent crude was up 0.5 percent to $119.12 a barrel as of 7:20 a.m. EDT.

ABC/Reuters

Posted 2 hours ago Thursday, June 16, 2022 21:52, Updated 2 hours ago Thursday, June 16, 2022 22:05

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