The chain reaction caused by the interest rate hike storm is still continuing.
overnight, US stock suffered another "Black Monday". The three major US stock indexes fell sharply, all of which fell for five consecutive trading days. Dow Jones Industrial Index hit a new low since November 2020.
. Correspondingly, with the Federal Reserve crazy hikes interest rates, the dollar index hit a 20-year high. On the 23rd, the US dollar index broke through the 113 mark and rose 1.61% intraday. On the 26th, the US dollar index once approached 115 during the session.
pound, Indian rupee, Vietnamese dong all fell to new lows against the US dollar; the Korean won closed down 1.54% against the US dollar in the domestic market of South Korea to 1431.3, the largest single-day decline since March 23, 2020.
US stocks fell across the board, and the Dow Jones fell into a bear market!
The three major U.S. stock indexes surged and fell back to . During the session, Nasdaq Index rose more than 1%. As of the close, Dow Jones Industrial Index, Nasdaq Index, and S&P 500 Index fell 1.11%, 0.60%, and 1.03%, respectively, and the US stock market encountered "Black Monday". The three major U.S. stock indexes all fell for five consecutive trading days. The Dow Jones Industrial Average hit a new low since November 2020 and fell below the 30,000 point mark. Compared with the January high, the Dow Jones Index fell by more than 20%, falling into the bear market range.
On September 26th local time, major European stock indexes rose and fell mixed. The FTSE 100 index in the UK rose 0.03%, French CAC40 index fell 0.24%, German DAX index fell 0.46%, Italy's FTSE MIB index rose 0.67%, Russia's MOEX index fell 7.49%, and Europe's STOXX50 index fell 0.18%.
Cleveland Fed Chairman Mester said the Fed is committed to using tools to reduce inflation to its target of 2%. Currently, inflation expectations are not stable, and the pressure of inflation in is still very high, and wage pressure is one of the reasons for this phenomenon. The Fed will be very cautious and will need to observe for a few more months to come to the conclusion that inflation has peaked.
Institutional people are not optimistic about the US stock market. Michael Wilson, chief U.S. stock strategist at Morgan Stanley , issued another pessimistic prediction, saying that the strength of the US dollar will always lead to financial or economic crisis in history, and the S&P 500 will fall 13% to 3,000-3,400 points. The U.S. dollar index has risen 19% this year, while S&P has fallen nearly 23%. Last Friday, Goldman Sachs also significantly lowered its S&P 500 target point at the end of this year from 4,300 points to 3,600 points.
The UK was brutally killed by stocks, bonds and foreign exchanges!
Concerns about interest rate hikes are everywhere, and the British financial market has once again staged a "three-kill of stocks, bonds and foreign exchanges". On Monday, the pound once plummeted by more than 4% to a historical low of 1.0384, and British bonds also plummeted sharply. Last Friday and this Monday, the yield on the UK government bonds showed the largest single-day increase in nearly 30 years for two consecutive days, with the yield on the 5-year UK Treasury bonds rising by more than 50 percentage points for two consecutive days, setting a new record high.
htmlOn September 23 and 26, British government bonds suffered the largest single-day decline in nearly 30 years, among which the yields of 2-year and 5-year UK Treasury bonds hit the highest since September 2008.The British stock market also suffered a tragic plunge . After falling 2% last Friday, the FTSE 100 index fell by more than 1% during the session on Monday, and finally closed flat.
The "nuclear bomb" that triggered this round of "three kills on stocks, bonds and foreign exchanges" was due to the fiscal policy announced by the British government last Friday.
Last Friday, the British Finance Minister announced a series of radical tax cuts: In addition to providing £60 billion in energy subsidies to households and businesses in the next six months, the Finance Ministry expects to inject about £161 billion into the market through tax cuts and other programs in the next five years.
This triggered panic in the market. The market's most worried scenario is that the UK government's radical tax cuts will further stimulate inflation and drive the pound to depreciate, thus falling into a spiral of hyperinflation.
After the pound suffered a thrilling crash, the Bank of England may set off a storm of interest rate hikes. According to the latest data from Bloomberg , current traders expect the Bank of England to raise interest rates by up to 200 basis points by the end of November 2022.Dan Hansen, a senior economist at Bloomberg, warned that the pound's plunge "will sound the alarm for the Bank of England" and that if the decline continues, the Bank of England's next move is likely to be a 100 basis point rate hike, which is likely to be held at an emergency meeting. The Bank of England issued a statement on the 26th saying that it is closely monitoring the development of financial markets and will change interest rates "without hesitation" when necessary.
Moscow Exchange index fell below 2,000 points for the first time in five years
According to CCTV.com , citing the Russian Businessman's newspaper, the Moscow Exchange Index closed at 1933.35 points at the end of the main trading period on the 26th, closing below 2,000 points for the first time in five years. During the evening trading that day, the index continued to fall, falling below 1,900 points.
As tensions surrounding Ukraine intensified and partially mobilized Russia, capital risk aversion has heated up, abandoning high-risk assets, and stocks in the technology and raw materials sectors have fallen the most. In addition, given the possible increase in external sanctions pressure and the private sector’s tax burden, analysts believe that the Moscow Exchange Index may continue to fall to the 1700-1800-point range.
Oil prices fell to their lowest level in more than eight months, and Brent oil fell below $85
Oil prices continued the decline of a decline of about 5% last Friday. WTI November crude oil futures closed down $2.03, or 2.58%, at $76.71 per barrel, the lowest since January 3, with the year-on-year increase narrowing to less than 2%. Brent November crude oil futures closed down $2.09, down 2.42%, at $84.06 per barrel, up more than 8% this year.
US oil WTI once returned to the integer of US$80 during the session, and then fell rapidly again under the pressure of the strengthening of the US dollar and hit a daily low. The deepest drop of more than US$2 or 2.8%, and once lost to US$77, setting a new low since early January this year.
International Brent November futures 's deepest fall of $2.34 or 2.7%, and the daily low is less than $84. December futures, which are more active in trading, have temporarily returned to $86, and then fell by $2.39 or 2.8%, falling below $83, which is also the lowest in the past nine months since January this year.
Gold hit its lowest closing price since April 2020
In the early morning of Beijing time on the 27th, New York gold futures prices fell on Monday and hit their lowest closing price since early April 2020.
Analysts said that the Fed raised interest rates for the third consecutive week by 75 basis points, putting gold prices under heavy recent pressure. And the Fed will not change its policy direction in the coming months, which makes the medium-term outlook for gold prices look bleak.
Gold futures price for December delivery on the New York Mercantile Exchange fell $22.20, or 1.3%, closing at $1,633.40 per ounce, the lowest closing price since April 1, 2020.
Xinhua News Agency : The strong dollar leads to a "strong earthquake" in the market. How does the hegemony of the dollar disrupt the world?
Xinhua News Agency published a commentary article on the 26th, pointing out that the strong dollar leads to a "strong earthquake" in the market. How does the hegemony of the dollar disrupt the world? The US Federal Reserve Board decided to continue aggressively raise interest rates by 75 basis points a few days ago, pushing the exchange rate of the US dollar against other currencies to continue to rise, causing turmoil in the international financial market.
International Observation people believe that driven by US monetary policy, the continued strengthening of the US dollar is having a destructive impact on the global scale. Taking monetary policy and exchange rates as important tools, the United States has continuously pushed up global inflation and debt levels with the help of the hegemony of the US dollar, squeezed the monetary policy space of various countries, and pushed the world economy to recession by driving the wave of global austerity.
According to the U.S. " Wall Street Journal ", the intercontinental exchange dollar index, which measures the exchange rates between the United States and its major trading partners, has risen 14%, the strongest year for the dollar since its launch in 1985. The euro, yen and pound sterling all fell to decades lows against the dollar, and emerging market currencies also suffered heavy losses.
Analysts believe that the exchange rate " scissors gap " brought about by the strengthening of the US dollar is "harvest" the world through inflation. Whether developing countries or other developed countries, once the local currency depreciates against the US dollar, the cost of importing bulk commodities , denominated in US dollars, will inevitably increase, aggravating its own inflation; for the United States, importing goods from other countries becomes cheaper, and the appreciation of the US dollar has become one of the means to alleviate domestic inflation.
Under pressures such as intensifying inflation and depreciating local currency, many countries have to follow the pace of the Federal Reserve and raise interest rates. In the words of Ethan Harris, chief economist at Bank of America, , the world is in a "rate hike race".
Before and after the Federal Reserve's interest rate hike, the central banks of Sweden , Switzerland , the United Kingdom and South Africa all raised interest rates sharply. Among them, the Swiss National Bank's interest rate hike marks the end of the 10-year negative interest rate era in Europe, and Japan has become the only major economy to maintain a negative interest rate policy.
International observers believe that the Fed has shown that it will curb inflation at all costs and realize the interests of the U.S. economy. With other central banks passively following the pace of the Fed, the risk of world recession has also increased significantly.
Federal interest rate hikes , the yield on the 10-year U.S. Treasury bond, which is the key benchmark for global lending costs, soared to 3.69%, the highest level since 2011. The latest data from the International Finance Association shows that emerging economies will have $83 billion in government debt due by the end of next year. After the dollar strengthens, the dollar debts borne by governments and businesses in emerging economies will be more expensive.
World Bank Chief economist Indmit Gill warned in an interview with the UK's "Financial Times " that debt risks in emerging economies are particularly prominent. Some low-income countries are more vulnerable than before the international financial crisis and may fall into debt amid the global austerity wave.
