50, 50, 50, 50! Risky Asset Market Shaken Because of Central Banks


 The implementation of interest rate increases of 50 basis points by the world's 4 main central banks yesterday; The Federal Reserve (Fed), the Swiss National Bank (SNB), the Bank of England (BOE) and the European Central Bank (ECB) dampened equity market gains.

It was the last policy tightening by central banks for the year in their efforts to control soaring inflation amid a worrisome global situation.

In addition, the follow-up comments also indicate that policy tightening will not be slowed down for next year despite a small contraction in the inflation rate, especially in the United States (US).

As a result, Wall Street ended the trading session in negative territory with the Dow Jones Industrial down 2.25%, the S&P 500 down 2.5% and the Nasdaq Composite down 3.2%.

In Europe, the STOXX 600 fell 2.85% after the BOE and ECB raised rates by half a basis point yesterday while MSCI's broad gauge of global shares plunged 2.5%.

This morning's trading session in Asia saw Australia's S&P/ASX 200 down 0.98%, Japan's Nikkei 225 down 1.37%, Topix down 0.85% and South Korea's Kospi down 0.68%.

Also in focus yesterday was US retail sales data which saw the biggest fall at -0.6% compared to the forecast of -0.2% and far behind last month's record of 1.3%.

Commenting on the state of the market was Christian Hoffmann of Thornburg Investment Management saying buying interest faded with inflation concerns clouding investors as the market looked for other negative catalysts.

In the meantime, Treasury yields that move inversely with falling prices even as bonds in Europe show an increase.

The 10-year note was down 4.9 basis points at 3.454% and the 30-year yield was down 3.4 basis points at 3.505%.