August 9, 2022


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Global markets are stable but recession fears remain

Global markets are stable but recession fears remain
  • The dollar is nearing its highest level in two decades against the euro
  • Euro is gathering at a 20-year low; sterling depreciation
  • European shares rebounded after sharp decline

LONDON / SINGAPORE / TOKYO (Reuters) – Temporary calm returned to global markets on Wednesday, with the euro stabilizing after falling to a two-decade low and oil returning to above $100 a barrel after falling close to 10 percent the day before.

The single currency was trading at $1,025, just over its weakest level since late 2002 that it touched overnight on fears of a slowdown and higher commodity prices. Read more

Government bond yields rose across the eurozone as well, European stocks also made gains, while Brent crude rebounded nearly 3% after falling 9.5% on Tuesday to its lowest in two and a half months. Read more

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Euro Stoxx 600 wide (.stoxx) It rose 1.9%, with indexes in Frankfurt (.GDAXI) and Paris (.fchi) an increase of 1.7% and 1.9%, respectively. selling by pieces (.SXRP) Travel and Leisure stocks (.sxtp) led gains.

However, investors said the growth concerns that have recently haunted the markets remain.

“The market moves over the past couple of days have been classic stagnation pricing,” said Hugh Jimber, global market strategist at JPMorgan Asset Management. “Investors are already becoming more aware of the risks.”

The dollar index was far from its 20-year peak at 106.57, with safe havens including the Japanese yen in demand.

MSCI World Stock Index (.MIWD00000PUS)Which measures stocks in 50 countries, rose 0.1%. S&P 500 futures pointed to a gain of about 0.3% on Wall Street.

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Earlier, the MSCI Asia-Pacific stock index outside Japan (MIAPJ0000PUS.) It fell 1%, led by a 2% drop for Taiwan’s benchmark index (.twii).

The British pound has traded close to the dollar for two years against the dollar as Prime Minister Boris Johnson clings to power, hit by the resignation of ministers and a growing number of lawmakers who have demanded his departure. Read more

Sterling was down 0.1% against the dollar at $1.1912, off the $1.1899 it touched the day before, and its lowest since March 2020. Read more


Brent crude futures rose nearly 3% to $105.85 a barrel, with supply concerns returning to the fore even as concerns about a global recession persist. Read more

Uncertainty about gas supplies in Europe led the latest round of growth concerns, sending prices higher. Record gas prices in the Netherlands have doubled since mid-June.

However, the Norwegian government intervened on Tuesday to end a strike in the petroleum sector that cut oil and gas production, ending a stalemate that could have exacerbated Europe’s energy supply crisis. Read more

Some investors are concerned that the flow along the Nord Stream pipeline, which brings gas from Russia to Germany, may not resume after a ten-day maintenance halt from July 11, and that winter supply shortages will then lead to rationing and a sharp decline in economic activity. .

The background is high interest rates.

The Federal Reserve will release minutes later Wednesday from its June meeting, where it announced the highest increase in the benchmark interest rate in the United States in nearly 30 years. Likely to portend further increases as Federal Reserve officials have said their top priority is to fight inflation, even at the expense of growth.

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“The potential for a soft landing has declined significantly,” August Hatek, co-head of UBS Wealth Management Asia Pacific, told investors at a conference in Singapore.

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Additional reporting by Tom Wilson in London, Sam Byford in Tokyo and Tom Westbrook in Singapore; Editing by Sam Holmes, Kim Coogill and Angus McSwan For the Reuters Live Markets blog on European and UK stock markets, please click:

Our criteria: Thomson Reuters Trust Principles.