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Global equity/currency markets update: Stocks in Asia fall on recession risks, firm dollar

28 Sep 2022 8:24 am
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Mumbai, 28 Sep (Commoditiescontrol): Stocks in Asia slid on Wednesday as surging borrowing costs fed fears of a global recession, spooking investors into the arms of the safe-haven dollar and driving the Chinese yuan to record lows.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.7% to its lowest since April 2020 as selling swept across emerging markets.

Japan's Nikkei shed 2.1% and South Korean stocks fell 2.4% to a two-year low. Chinese blue chips lost 0.6%.

After a steady start, S&P 500 futures got caught in the bearish mood and slipped 0.8%, while Nasdaq futures dropped 1.0%. EUROSTOXX 50 futures fell 0.8%, while FTSE futures lost 0.9%.

Moody's on Tuesday warned the UK government that large unfunded tax cuts were "credit negative" and could undermine the government's fiscal credibility.

Yields on British 10-year gilts have risen a staggering 119 basis points in just four sessions to reach 4.50%, the sharpest such move since at least 1979. The safe-haven dollar has been a major beneficiary from the rout in sterling, rising to a fresh 20-year peak of 114.520 against a basket of currencies.

The dollar edged back up to 144.74 yen , testing the resolve of the Japanese authorities to protect the 145.00 level after last week's intervention.

The euro slipped anew to $0.9552 and back toward last week's two-decade low of $0.9528. The dollar also touched a record high on the Chinese yuan at 7.2088 , having risen for eight straight sessions.

The mounting pressure on emerging market currencies from the dollar's rise is in turn adding to risks that those countries will have to further lift interest rates and undermine growth.

The ascent of the dollar and bond yields has also been a drag for gold, which was hovering at $1,624 an ounce after hitting lows not seen since April 2020.

Oil prices fell again as crude storage builds and the strong dollar offset support from U.S. production cuts caused by Hurricane Ian. Brent fell $1.02 to $85.25 a barrel, while U.S. crude lost 93 cents to $77.57 per barrel.

(By Commoditiescontrol Bureau: +91-22-40015505)

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