World stocks eye glum 2022 even as dollar triumphs

China’s blue-chip CSI 300 Index was up 0.4% on the day but down 22% on the year, while Hong Kong’s Hang Seng index rose 0.2% on the day but fell 16% in 2022.

Chinese leaders have pledged to step up policy adjustments to cushion the impact on businesses and consumers from a surge in Covid-19 infections.

China’s health system has been under stress due to soaring cases since the country started dismantling its “zero-Covid” policy at the start of December, with several countries imposing or considering imposing curbs on travellers from China.

The dollar index, which measures the greenback against six major currencies, dipped 0.16%.

The dollar has gained more than 8% over the year, but it lost more than 7% this quarter on expectations the Fed may not raise rates as high as previously feared.

Sterling was set for its worst performance against the dollar since 2016, when Britain voted to leave the European Union. It was last at $1.2063, down 0.09% on the day and around 11% on the year.

The Japanese yen strengthened to a 10-day high of 131.72 per dollar, but the Bank of Japan’s ultra-dovish policy has pushed it 13% lower this year, its worst performance since 2013.

The euro was steady at $1.0669, and was eyeing a 6% fall on the year.

Investors have been worried that central banks’ efforts to tame inflation could lead to an economic slowdown.

“Averting a downturn is a tall order,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank, noting that the odds are stacked against economies emerging unscathed from global policy tightening.

Going into 2023, inflation has still to be beaten and investors will also be wary of geopolitical tensions arising from the war in Ukraine and diplomatic strains over Taiwan, analysts said.

US Treasuries and German bonds, the benchmarks of global borrowing markets, lost 16% and 24% respectively in dollar terms this year.

Ten-year US Treasury yields gained one basis point to 3.84% on Friday, while 10-year German Bund yields rose 3.5 bps to 2.5%.

US crude rose 0.54% to $78.72 per barrel and Brent was at $83.87, up 0.49% on the day.

Brent looked set to end the year with a gain of 8%, after jumping 50.2% in 2021. US crude was on track for a 4.8% rise in 2022 after a 55% gain in 2021.

Gold was steady at $1.816 per ounce, and was also little changed on the year.

Reuters

Source: businesslive.co.za