Risk-off tone persists ahead of the weekend, pushing stocks lower
US stocks closed lower on Thursday to post their third straight daily decline. Investors continued to express worries about the Fed’s aggressive rate hikes that could push the economy into a recession. The S&P 500 slid 0.8%, the Nasdaq Composite shed 1.4%, and the Dow Jones Industrial Average closed 0.3% lower. Since the start of the week, the Dow is down more than 2.4%, while the S&P and Nasdaq have tumbled over 3% each. Meanwhile, the yields on the 10-year and 2-year Treasury notes notched fresh multiyear highs.
Asian equities fell for a third day on Friday as risk aversion continued to persist across the global markets. MSCI’s broadest index of Asia-Pacific shares outside Japan was down 1.42%. South Korea’s Kospi dipped 1.8%, Hong Kong’s Hang Seng index lost 0.89% while the Shanghai Composite in China shed 0.66%. Japan markets were closed for a holiday Friday. On Thursday, the USDJPY pair retreated from multi-year peaks following the first intervention by Japanese authorities to buy the yen since 1998.
In Europe, stock markets opened slightly lower, with risk-off tone persisting ahead of the weekend. Still, the recovery potential looks limited as investors digest the latest moves by central banks. The Bank of England and the Swiss National Bank hiked rates by 50 basis points each. On the data front, Spain’s second-quarter final GDP came in at +1.5% versus the preliminary estimate of +1.1% q/q.
As for currencies, the USD index came off two-decade tops seen around 111.80 on Thursday. However, the greenback regained the upside bias on Friday to retarget the upper end of the extended trading range in early European deals despite overbought conditions. As such, EURUSD is back under pressure after a short-lived reprieve, refreshing long-term lows below the 0.9800 mark. The pair dipped to 0.9770 before bouncing modestly. The next bearish target arrives around 0.9750, followed by the 0.9700 level.