Overnight Market Wrap: 22 August 2022

Overnight Market Wrap: 22 August 2022

Key Points:

  • Stocks Come Off Lows as Traders Weigh Fed Outlook
  • Hawkish tone at Fed symposium due this week looms as key risk
  • Firm dollar shows investor caution in an uneven global economy

An Asian stock gauge pared a slide Monday but remained in the red along with US equity futures as the Federal Reserve’s commitment to tighter monetary settings to quell inflation restrained investor sentiment.

MSCI Inc.’s Asia-Pacific share index dipped less than 0.5% with modest losses evident in most major markets except for a smattering of gains in China, which may have been boosted by a move by banks to trim lending rates.

S&P 500, Nasdaq 100 and European contracts suffered declines and a dollar gauge was at a more than one-month peak, signs of ongoing investor wariness.

Sovereign-bonds in Australia and New Zealand dropped and the US 10-year Treasury yield climbed to about 2.98%, extending a selloff from Friday.

A jump in global shares from June’s bear-market lows has begun to cool, weighed down by repeated Fed warnings that interest rates are going higher. Troubling global economic developments, lately including power shortages in a Chinese industrial heartland, are also hanging over investors.

Key for markets this week is the Fed’s symposium at Jackson Hole, Wyoming. The recent stock bounce has loosened financial conditions, which makes it harder to tackle inflation. 

The Chinese demand outlook is weighing in oil, which sank below $90 a barrel. Traders are monitoring Iran nuclear talks that could lead to more supplies. 

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