Key Points:
- Stocks Drop, Yields Rise in Rocky Start to Week
- Risk assets face more pressure as inflation fears intensify
- Pound slumps, Asia currencies struggle against greenback
Asian equities opened lower and bond yields climbed amid unrelenting pressure on risk-sensitive assets on Monday as fears of faster inflation and global recession continue to rise.
Shares dropped in Japan, Australia and South Korea while an index of global stocks plumbed new lows for year. US stock futures fell and contracts for Hong Kong pointed lower.
The pound led declines among major currencies, falling to a fresh 37-year low as the UK’s fiscal plans added to the challenge for monetary authorities trying to quell price growth. The euro swung between gains and losses as investors weighed the prospect of Italy under the most right-wing government since World War II.
Trading this week will be punctuated by a number of economic reports including US initial jobless claims and gross-domestic-product data, along with PMI figures from China. Choppiness in price moves is likely with a steady stream of Federal Reserve officials speaking through the week.
Underscoring the concern in markets, the Cboe Volatility Index, which serves as a “fear gauge” for Wall Street, jumped to a three-month high on Friday. Adding to the bleak outlook, Goldman Sachs Group Inc. slashed its target for US stocks at the end of last week, warning a dramatic upward shift in the outlook for rates will weigh on valuations.
“It’s a king US dollar — we’ve been seeing currencies across Asia come under pressure,” Sian Fenner, senior Asia economist for Oxford Economics, said on Bloomberg TV. “It’s adding to inflationary pressures and more central banks raising rates more than we have historically seen.”
Oil held near $80 a barrel amid heightened fears over a hard economic landing. Gold was little changed and Bitcoin stayed below $19,000.