Updated at 10:51AM EST
US stocks extended their decline for the fourth consecutive session on Friday, while global stocks fell to their lowest levels in two years, as investors retreated from risk markets amid hawkish signals about the central bank rate and slowing global growth.
Stocks have also been hit by the spillover effects of Britain’s first budget under new Prime Minister Liz Truss, which includes borrowing an additional $80 billion to pay tax cuts and energy price caps in the world’s fifth-largest economy.
The standard 5-year government bond, the equivalent of Treasuries, suffered its largest one-day decline since 1991 while the pound fell to a 37-year low of 1.0908 against the dollar.
The Fed’s 75 basis point rate hike earlier this week, its third in a row, was echoed in both moves and rhetoric from central banks around the world this week, raising benchmark borrowing costs and shrinking global equities. .
There are more big rate hikes as well, with CME Group’s FedWatch citing a 77.1% chance of a further 75 basis point increase in November, up from 0% in late August.
The hawks have benefited, mostly, only the US dollar, which climbed to a 20-year high against its global peers despite the first intervention in the currency market from the Bank of Japan – aimed at boosting the weakening yen – since 1998.
Economic activity data from Europe underlined the impact of both rate hikes and upbeat signals, with Germany’s robust manufacturing sector pointing to a deep contraction in September and the region-wide composite PMI reading steady below the 50 point mark indicating growth for the second month in a row.
In the US, where the Atlanta Federal Reserve’s GDP forecast tool now reports third-quarter growth of just 0.3%, the bond market continues with recession warnings, with benchmark two-year bond yields rising to 4.195% in early New York trading, causing Puts it within 44 basis points north of a 10-year bond.
In fact, US Treasury yields have risen more than 110 basis points since August 1, as noted by Bank of America in its weekly “Flow Show” report, helping to set global bond markets on pace for their largest annual decline in more than seven decades.
Meanwhile, Goldman Sachs lowered its full-year target for the S&P 500 index to 3,600 as investors raised concerns about the so-called “hard landing” of the world’s largest economy.
The US dollar index rose another 0.86% in overnight trading to a two-decade high of 112.315, pushing the euro up to 0.9710.
Stocks in Europe returned to the red on Friday as well, with the Stoxx 600 index down 2.2% in midday Frankfurt trading, and the FTSE 100 down 2.2% in London, where Finance Minister Kwasi Koarting presented the first budget statement to lawmakers in Parliament. .
This came after a 1.65% drop in the previous MSCI Japan Index in Asia as stocks in China remained stuck at four-month lows with renewed growth concerns in the world’s second largest economy.
In the US, the S&P 500 fell 67 points in the opening hour of trading while the Dow Jones Industrial Average fell 460 points to fall below the 30,000 level for the first time since its lows in mid-June. The technology-focused Nasdaq fell 197 points to extend its September decline to 8.03%.
costco (cost) Stocks were a notable pre-market driver, falling 3.3% after the wholesale retailer posted stronger-than-expected fourth-quarter earnings, but saw profit margins tighten amid higher input costs.
DocuSign (DOCU) Shares were active, but fell 1.8% amid selling technology shares, after the online signature selling group appointed former Google Ads CEO Allan Thygesen as the group’s CEO.
Boeing (BA) It fell 0.8% after the aircraft maker, as well as former CEO Dennis Muilenburg, agreed to pay just over $200 million in fines to the US Securities and Exchange Commission for misleading investors in the wake of two fatal 737 Max crashes.
apple (AAPL) C., meanwhile, appears to have stolen a rally on its big tech rivals in the bidding war for the rights to the NFL Sunday Ticker programming package after reaching a deal late Thursday to sponsor the Super Bowl halftime show.