Overnight Market Wrap: 12 October 2022

Overnight Market Wrap: 12 October 2022

Key Points:

  • Stocks Sink After BOE Warning Rattles Investors
  • S&P 500 earlier fell to lowest intraday since November 2020
  • Dollar reverses earlier losses, Treasury yields climb

US stocks turned sharply lower in late trading after comments by the Bank of England chief on removing market support rattled investor sentiment. Benchmark Treasury yields rose and the dollar gained.

The S&P 500 slid amid renewed selling in tech shares that sent the Nasdaq 100 down more than 1%. Long-end Treasuries bore the brunt of losses and the pound tumbled after BOE Governor Andrew Bailey urged investors to finish winding up positions that they can’t maintain, saying the central bank will halt intervention in the market as planned at the end of this week.

Risk sentiment remained fragile after a four-day losing streak wiped $1.6 trillion off the value of the S&P 500 Index ahead of US inflation readings. Data Thursday may seal the case for another 75-basis-point interest-rate increase at the next Federal Reserve meeting in the absence of a major shortfall. 

In addition to inflation data, big US banks kick off the third-quarter earnings season in earnest later this week, with strategists braced for weak profits against a drumbeat of warnings over the rising risk of a global recession. The International Monetary Fund joined the refrain, warning of a worsening outlook as efforts to curb inflation may add to damage from the war in Ukraine and China’s slowdown.

With world growth under pressure, US oil futures tumbled more than 2%, giving up more of last week’s 17% rally. 

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