The implementation of interest rate hikes by the Bank of England (BOE) and the Swiss National Bank (SNB) in tightening its monetary policy has allayed market concerns, causing equities to fall back.
The rally enjoyed as soon as the US Federal Reserve (Fed) meeting saw a 75 basis point increase, its biggest gain since 1994, was capped as investors returned to worries about economic props after rate hikes by the two central banks.
The SNB has acted to raise rates by 50 basis points for the first time in 15 years while the BOE implemented a policy tightening for the 5th time at 25 basis points after the European Central Bank (ECB) promised bond market support.
That string, the worldwide MSCI gauge slipped to a 19 -and -a -half -month low of 2.25%.
Wall Street saw major indices trade at year-and-a-half lows with the Dow Jones Industrial Average down 2.5%, the S&P 500 down 3.3%and the Nasdaq Composite down 4.1%.
The MSCI Asia-Pacific broad index of stocks outside Japan slipped 0.84% and the pan-European STOXX 600 index slipped 2.47%.
Swiss stocks also fell 19% and Britain’s benchmark FTSE 100 was down 3.14% following rate hikes by their respective central banks.
Meanwhile, the US 10 -year treasury yield reached 3.495% before retreating slightly to 3.3125% but remaining at the highest level recorded Thursday at 3.498%.
Germany’s 10 -year yield jumped 26 basis points after a rate hike by the SNB put pressure on European bond prices as investors bet for an ECB rate hike.
Currency flows saw the Swiss Franc jump 2.9% to a 20 -year high of 105.79 while dragging the dollar index down 0.95% at 103.80 after the SNB announcement.
Sterling which initially plunged as soon as the BOE announcement, but recovered in the New York session to rise 1.4% at $ 1.23485.
As for commodities, US crude rose 1.45% at $ 116.98 and Brent oil added 0.57% at $ 119.19 after the announcement of new sanctions on Iran by President Joe Biden ahead of supply concerns.
Gold rose as the dollar and Treasury yields weakened with spot gold jumping 1.2% at $ 1,854.54 an ounce.
