Overnight Market Wrap: 1 September 2022

Overnight Market Wrap: 1 September 2022

Key Points:

  • Stocks, US Futures Drop as Fed Outlook Hits Mood
  • Markets gets a tough start to September after painful August
  • Two-year Treasury yield touches 3.50%; yen near 140 per dollar

US equity futures and Asian stocks fell Thursday on economic growth worries amid a hawkish drumbeat from central banks, pushing up the dollar as investors sought a haven from the volatility in global markets.

Tech firms helped send an Asian share index to a six-week low, with China’s bourses among the few to hold steady. S&P 500 and Nasdaq 100 contracts slid, the latter in part on a tumble in chipmaker Nvidia Corp. over a sales warning.

 The jitters come after the worst month since June for US shares, reflecting fears of an economic downturn alongside restrictive monetary policy to curb inflation. The two-year Treasury yield touched 3.50% for the first time since 2007 amid a bond selloff that also buffeted Australian and New Zealand debt.

Commodity-linked and Group-of-10 currencies weakened as the dollar advanced. The yen fell to a fresh 24-year low, heading closer to the 140 per-dollar level.

Stocks are entering a month that is often poor for returns after an August of losses across key asset classes. A bounce in global shares from June lows is fizzling as the Federal Reserve pushes back against bets on tempered rate hikes. Global bonds, meanwhile, are sliding toward the first bear market in a generation

Elsewhere, oil was on the back foot, sliding to about $89 a barrel. Aggressive Fed tightening and China’s slowdown are dimming the demand outlook. Bitcoin weakened, hovering around the closely watched $20,000 level.

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