Stocks and bonds continued to fall on Thursday as pandemic-induced factory shutdowns in China and hawkish outlooks from central banks deterred investor confidence. Europe’s Stoxx 600 and New York’s Nasdaq 100 Index both fell by over 1% while Asian shares declined following losses an announcement by chip maker Nvidia Corp. warning of a slowdown in sales.
Fears of an economic downturn saw global bonds sink further, with the two-year Treasury yield reaching 3.5% for the first time since 2007. Gold and silver plummeted as well, falling to their lowest value in two years.
September is a month that is historically known for low returns, with the Federal Reserve’s commitment to combatting inflation with rate hikes adding to the mix. “The Fed effect is now melding with other global factors such as China’s growth slowdown and Europe’s stagflation to create a more fraught global macro environment with higher rates and lower growth,” Alvin Tan, strategist at RBC Capital Markets in Singapore observed.
Currencies across the board weakened in the face of economic pressure, with the US dollar emerging as one of the few that was able to hold strong. The yen fell to a 24-year low of 139.25 per dollar, while the British pound fell 0.2% to $1.1602. The euro lost 0.3%, now sitting at $1.0023. The Bloomberg Dollar Spot Index, in contrast, rose 0.2%.
