U.S. stocks posted their longest quarterly losing streak since the 2008 market crash, weighed down by central banks’ determination to contain inflation through higher interest rates.
The S&P 500 blue-chip index fell 1.5% on Friday, bringing its June-September quarter loss to 5.3%. The S&P Index is now down three quarters in a row, its highest level since the prolonged bear market that accompanied the global financial crisis.
The tech-heavy Nasdaq Composite also fell 1.5% on Friday, ending the quarter down 4.1% to hit the index’s worst close since July 2020.
This year has been tough for the stock market, as central banks including the US Federal Reserve signaled that they will continue to raise interest rates, reducing support for economic growth, in an effort to curb inflation. This week The Bank of England intervened to calm the turmoil in the UK government debt market.
“Today, I think the market is realizing that the economy is likely to slow down rapidly, but the Fed can do nothing to stop it. Peter Tchir, head of macro strategy at Academy Securities, said: “With stock price volatility and liquidity across all markets in the US deteriorating, many investors are worried about the possibility of stock and bond prices fell rapidly, large”.
“Central banks are telling us they will tame inflation, that will happen in [the] Emmanuel Cau, head of European equity strategy at Barclays said.
U.S. Treasuries sold off on Friday, but remained above lows that fell sharply earlier in the week. Prices fell last Friday and Monday after the UK announced £45 billion in unrefundable tax cuts. UK and US bonds then stabilized after the BoE intervened this week with a new program to buy perennial debt.
Yields on 10-year US Treasuries, the global standard for borrowing, rose 0.03 percentage points to 3.81% after breaking above 4% on Wednesday for the first time in years. 2010. Yields rise as their prices fall.
But despite some rebound in Treasury debt since the BoE intervened, the rapid tightening of monetary policy this year includes both two-year bonds, which are sensitive to policy expectations and 10-year bonds, on the cusp of their biggest annual sale. – has a profile.
On Friday, the yield on the UK 10-year debt fell 0.05 percentage points to 4.08%. UK yields across all maturities have fluctuated wildly in recent sessions, with 10-year yields rising more than 0.4 percentage points on Monday before falling nearly 0.5 percentage points on Wednesday.
Cau said central banks have gone to great lengths to tell the market that the BoE action should not be seen as the start of a return to more broadly accommodative policy. “The [Federal Reserve] It has been very clear that what the BoE is doing should be considered isolationist and that the Fed will stick to its plan. The [European Central Bank] are doing the same,” he added.
London’s FTSE 100 was up 0.2% on Friday, while Europe’s Stoxx 600 was up 1.3%.
In Asian stock markets, Japan’s Topix index fell 1.8 percent on Friday. China’s Shanghai and Shenzhen-listed CSI 300 index fell 0.6%, while Hong Kong’s Hang Seng gained 0.3%.
Additional reporting by Hudson Lockett in Hong Kong