Overnight Market Wrap: 11 October 2022

Overnight Market Wrap: 11 October 2022

Key Points:

  • Stocks Fall as Growth Fears, Geopolitics in Focus
  • CPI data to be centre stage Thursday with Fed under pressure
  • Goldman, Morgan Stanley strategists warn of earnings gloom

US stocks fell for a fourth day as prospects for policy tightening and geopolitical risks weighed on investor sentiment. A gauge of dollar strength rose to the highest level this month.

The S&P 500 ended off lows in a choppy afternoon session that saw the benchmark almost reverse losses of The S&P 500 ended off lows in a choppy afternoon session that saw the benchmark almost reverse losses of more than 1%, before selling pressure gathered pace in the final minutes of trading. The Nasdaq 100 underperformed, with semiconductors among the worst performers after Washington’s move to further restrict China’s access to US technology added to signs of slowing chip demand worldwide. 

The dollar rose against almost all of its major counterparts amid signs of a new escalation in the Russia-Ukraine war. In the UK, turbulence gripped the gilt market, with the selloff accelerating despite the Bank of England extending its emergency backstop measures.

The mood remains fragile ahead of Thursday’s US inflation data and a raft of bank earnings that will kick off the third-quarter season in earnest. A hotter-than-expected inflation reading, coming on top of last week’s strong labor print, will heap pressure on the Fed to extend 75 basis-point rate hikes beyond this year.

Meanwhile, Britain stepped up efforts to support market functioning. The BOE extended emergency measures backing the bond market through early next month while Chancellor of the Exchequer Kwasi Kwarteng brought forward the date at which he will deliver his much-awaited fiscal strategy.

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