Stocks mixed, pound gains as dollar rally pauses: markets wrap

Global markets remained on edge Tuesday as investors braced for a heightened risk of global recession.

Stocks were mixed as Goldman Sachs Group Inc. and BlackRock Inc. turned more bearish on equities for the short term. Europe’s Stoxx 600 rebounded with US futures, while Asian shares fell.

Bonds remained under pressure in Europe and Asia as the worst selloff in decades intensified, while the benchmark 10-year Treasury yield held near the highest level since 2010 and UK notes gained.

The pound rose about 1%, following its drop to a record low Monday. Traders remained wary of the risk that the currency could slump to parity with the dollar after the Bank of England indicated it may not act before November to stem the rout.

Volatility across markets was also reflected by the risk of future price swings, which reached the highest since the beginning of the pandemic, as shown by a Bank of America index.

The dollar gauge inched back from a record high Monday, when Federal Reserve officials repeated hawkish comments on policy. Asian currencies including the yen and yuan strengthened slightly, while staying around levels that have caused concern from authorities in Japan and China.

The turmoil in markets shows little sign of turning Fed officials away from hawkish rhetoric. Boston Fed President Susan Collins and her Cleveland counterpart Loretta Mester said additional tightening is needed to rein in stubbornly high inflation and Atlanta Fed President Raphael Bostic also said the central bank still has a ways to go to control inflation.

Read More: Fed Officials Say That Tackling Inflation Is Their No. 1 Job

“The market is pricing in some Fed increases, but we’re a bit worried that it might not be pricing in everything,” Laila Pence, president of Pence Wealth Management, said on Bloomberg Television. “Everyone is nervous.”

Key events this week:

• US new home sales, Conference Board consumer confidence, durable goods, Tuesday
• Fed Chair Jerome Powell and Charles Evans speak at events, Tuesday
• Fed’s Mary Daly, Rafael Bostic, Charles Evans and ECB President Christine Lagarde speak at events, Wednesday
• Euro zone economic confidence, consumer confidence, Germany CPI, Thursday
• US initial jobless claims, GDP, Thursday
• Fed’s Loretta Mester, Mary Daly speak at events, Thursday
• China PMI, Friday
• Euro zone CPI, unemployment, Friday
• US consumer income , University of Michigan consumer sentiment, Friday
• Fed’s Lael Brainard and John Williams speak, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.6% as of 8:10 a.m. London time
• Futures on the S&P 500 rose 1%
• Futures on the Nasdaq 100 rose 1.1%
• Futures on the Dow Jones Industrial Average rose 0.8%
• The MSCI Asia Pacific Index fell 2.2%
• The MSCI Emerging Markets Index fell 1.9%

Currencies

• The Bloomberg Dollar Spot Index fell 0.5%
• The euro rose 0.4% to $0.9649
• The Japanese yen rose 0.4% to 144.24 per dollar
• The offshore yuan rose 0.3% to 7.1534 per dollar
• The British pound rose 1% to $1.0798

Cryptocurrencies

• Bitcoin rose 5.7% to $20,204.64
• Ether rose 4.5% to $1,384.05

Bonds

• The yield on 10-year Treasuries declined seven basis points to 3.85%
• Germany’s 10-year yield advanced two basis points to 2.14%
• Britain’s 10-year yield declined 10 basis points to 4.14%

Commodities

• Brent crude rose 1.2% to $85.10 a barrel
• Spot gold rose 1% to $1 639.23 an ounce