Investor sentiment is hurt by Fed’s hawkishness and rising Treasury yields
US stocks fell on Thursday to mark the third straight day of losses. The S&P index, which saw the worst session since March, gave up 1.64%, the Dow Jones and the Nasdaq Composite lost 1.08% and 1.82%, respectively. As a result, the Nasdaq is now poised to fall more than 3% for the week, while the S&P 500 is on track to end the week down more than 2%. Investors fear that federal lawmakers won’t pass a bill to avert a government shutdown. Also, the sentiment is hurt by Fed’s hawkishness and rising Treasury yields.
In Asia, the overall tone improved after the Bank of Japan BOJ stuck to an ultra-easy monetary policy and made no changes to its outlook. MSCI’s broadest index of Asia-Pacific shares outside Japan briefly fell a 10-month low before recovering to gain 0.4%. The Nikkei 225 index was trading down 0.68% after falling as much as 1% earlier in the day. Fresh data showed that Japan’s manufacturing sector slowed further in September. Australia’s ASX 200 turned positive to gain less that 0.1%, while South Korea’s Kospi lost 0.27%.
Following heavy losses on Wall Street Thursday, European indices opened lower ahead of the weekend. US equity futures pared early gains, suggesting risk sentiment could stay unstable in the near term. The data showed that private-sector activity in France and Germany continued to shrink in September, adding to a cautious tone in the regional markets.
The USD index refreshed March highs around 105.80, now holding just a few pips from this year’s top. The greenback remains supported by a hawkish Fed along with elevated Treasury yields. The rate climbed to fresh multi-year highs after fresh jobless claims data showed that the US labor market remains strong, suggesting the Fed could continue hiking rates. As such, the DXY is finishing its tenth positive week in a row and could target the 106.00 hurdle next.