Dear clients,
Oil prices hit one-year highs on Thursday, while global equities faced their longest losing streak in two years as fears of continued high interest rates intensified. This is causing investors to seek shelter under the influence of a rising US dollar.
Currency markets saw a brief respite from the dollar’s strength, but it was a significant drop in US crude oil inventories on Wednesday that shook nerves over fears of another supply shock just when the global economy needs it least.
The price of U.S. crude hit $95 a barrel for the first time since August 2022, while Brent crude prices rallied again in early trading in London after hitting a one-year high of $97.69.
The yield on ten-year US Treasuries, the benchmark for global borrowing costs, topped 4.6% for the first time since 2007, having started September at 4%.
Germany’s AAA bond yields went up again, while Italy’s announcement on Wednesday that its budget deficit was widening again drove its short-term two-year bond yield to a new 11-year high. Traders were also watching U.S. lawmakers try to avoid another government shutdown in Washington.
With European stocks down 0.4% (.STOXX) and U.S. futures on the S&P 500 index, MSCI’s main global index tracking 45 countries was on track for a 10th straight day of declines not seen since 2021.
MSCI’s index for Asia-Pacific shares hit a 10-month low and Japan’s Nikkei index fell 1.5% as investors preparing for the end of Q3 got rid of stocks that have run out of dividends.
