Pool / Getty Images
Global stocks fell again on Friday after Federal Reserve Chairman Jerome Powell gave little indication that the world’s most powerful central bank was willing to intervene in the recent sale of government bonds.
In the US, S&P 500 stock index futures fell 0.44%, while Dow Jones futures fell 0.46%. Futures for the high-tech Nasdaq 100 fell 0.49%, with investors reconsidering the value of many fast-growing companies in light of higher bond yields.
Asian stocks fell sharply before reducing their losses, while European stocks fell about 1% at the beginning of the session. Elsewhere, oil prices rose close to a 14-month high after the OPEC + producer group unexpectedly extended cuts in oil production.
Bond yields, which move inversely to prices, stabilized in European trade after skyrocketing overnight. The yield on the 10-year US Treasury key note fell 0.1 basis points to 1.549%, after touching 1.583%. At the beginning of the year, it was 0.92%.
Yields on government bonds are increasing as investors expect stronger growth and inflation and therefore demand higher returns on investments.
However, the rally has shaken stock markets – which have exploded as ultra-low yields have driven investors in search of solid returns in the stock markets that now seem less attractive.
Fed President Powell signaled on Thursday that the central bank is happy to keep the policy as it is for the time being.
“I would be concerned about the disordered market conditions or a persistent tightening of financial conditions,” he told the jobs summit of the Wall Street Journal. He said the Fed is looking at “a wide range of financial conditions”, not just an indicator.
Investors interpreted Powell’s words as meaning that the Fed was doing well with yields rising further. This hit stocks again, with the Nasdaq 100 closing 1.73% lower, becoming negative for the year, and the S&P 500 falling 1.34%. The Dow Jones, which has more stocks that are expected to benefit from strong economic growth and inflation, fell 1.11%.
China’s CSI 300 fell by up to 2%, but closed down 0.34% below. Japan’s Nikkei 225 finished 0.23% down.
Europe’s Stoxx 600 index fell 0.86% in morning trading, while the UK’s FTSE 100 fell 0.71%.
“Concerns about inflation and the continuing rotation of growing stocks are starting to weigh on the stock markets,” said Richard Hunter, director of markets at Interactive Investor.
“The perception of the threat of higher interest rates arriving earlier than expected has affected stocks, which could be more obviously affected by the resulting slowdown in earnings.”
Oil prices rose sharply overnight after the group of OPEC oil producers and their allies unexpectedly agreed to continue to limit supply.
Brent crude jumped 1.95% to $ 68.03 a barrel, a level not seen since January 2020. WTI crude rose 1.75% to $ 64.95 a barrel.
Bitcoin fell 6.5% to $ 46,940. Analysts said she was a victim of the broader market concerns.
Investors will be focused on U.S. job numbers in February, which will be released at 8:30 am Eastern Time. Analysts believe the payroll probably increased by 182,000 jobs last month, after rising to 49,000 in January, according to a Reuters survey.