Shafaq News / September got off to a stormy start on Thursday, as persistent worries about rising global interest rates and recessions hounded stocks and bonds and drove the safe-haven U.S. dollar to a 24-year high against the yen.
Indeed, data released early Thursday that showed U.S. manufacturing grew steadily in August, as employment and new orders rebounded, was not welcomed by investors, who worried a strong economy strengthens the case for the Federal Reserve to keep raising interest rates in the next few months.
Investors fear that continued monetary policy tightening by central banks in the United States and Europe would scupper the two regional economies, and trigger a recession.
The U.S. S&P 500 index (.SPX) slumped 1%, the Dow Jones Industrial Average (.DJI) fell 0.5%, and the Nasdaq Composite (.IXIC) tumbled 2.1%.
A 1.8% fall in Europe's STOXX share index of 600 companies (.STOXX) helped pushed MSCI's main world stocks index down 1.7% to its lowest since mid-July, while Europe's government bond markets saw more selling after their worst monthly rout in decades.
The bearishness was being fed by the possibility that the European Central Bank will raise its policy rate by a record 75 basis points next week following Wednesday's record high inflation reading.
Heavy shelling at Ukraine's giant Zaporizhzhia nuclear plant rattled nerves, too. Russia had shut its main gas pipe to Europe for maintenance, Washington ordered Nvidia Corp to stop selling high-tech chips to China, while veteran investor Jeremy Grantham warned of an "epic finale" to the stock market "superbubble" inflated by years of cheap money.
The euro tumbled 1.1% against a surging dollar to $0.99425, sterling fell 0.7% to $1.15360, while the risk-sensitive Australian and New Zealand dollars drooped to their lowest levels since July.
Hawkish Fed expectations saw Treasury yields hit fresh highs. The yield on benchmark two-year notes jumped to 3.5510% to the highest since late 2007, while the yield on 10-year bonds rose to a high of 3.2970%.
(Reuters)