Written by Tom Westbrook
SYDNEY (Reuters) – Asian stocks are set to start the last week of the quarter on a dip on Monday, while the dollar stood higher, as the prospect of higher interest rates and weak growth rattled markets.
It was flat after a low initial oscillation. Futures pointed to declines in Tokyo, Sydney and Hong Kong. The dollar made new highs on the pound and the euro and in the weak morning trading. [FRX/]
Last week, stocks and bonds collapsed after the United States and six other countries raised interest rates and predicted pain ahead. Japan intervened in currency trading to support the yen. Investors lost faith in the management of the British economy.
The Nasdaq lost more than 5% for the second week in a row. It fell 4.8%. [.N]
“A weekend of thinking hasn’t caused anyone to change their mind,” said Ray Atrell, head of currency strategy at National Australia Bank (OTC 🙂 in Sydney. “It’s a case of shooting first and asking questions later, in relation to the UK’s origins.”
Bonds suffered their biggest sell-off in three decades on Friday, and sterling on Monday hit a 37-year low of $1.0765, as investors believe the planned tax cuts will maximize government funding. [GB/]
Sterling is down 11% this quarter. [GBP/]
Five-year Treasury yields rose 94 basis points last week, the largest weekly jump recorded in Refinitiv data stretching back to the mid-1980s. Treasuries also fell last week, with two-year yields up 35 basis points to 4.2140% and benchmark 10-year yields up 25 basis points to 3.6970%. [US/]
The euro fluctuated to a two-decade low of $0.9660 as the risks of war in Ukraine escalated, before settling at $0.9696.
In Italy, a right-wing coalition led by Giorgia Meloni’s Italian Brotherhood was on course for a clear majority in the next parliament, as expected. Some were encouraged by the mediocre performance of the Eurosceptic “The League”.
“I would expect a relatively small impact given that the League, the least pro-European party, appears to have come in weak,” said Giuseppe Cercil, fund manager and strategist at Anthelia in Milan.
Other currencies were nursing losses. The Australian dollar touched $0.6510, the lowest level since mid-2020. The yen hovered at 143.47 with fears of a possible additional intervention preventing it from losing. Japan intervened in the foreign exchange market on Thursday to buy the yen for the first time since 1998.
Oil and gold stabilized after falling against the dollar’s rally last week. Gold hit a more than two-year low on Friday and bought $1,643 an ounce on Monday. Futures rose 71 cents to $86.86 a barrel. [GOL/][O/R]
