Stocks slid with bonds Friday and the dollar rose as inflation, rising borrowing costs and China’s Covid lockdowns depressed sentiment.
An Asia-Pacific share index shed over 1.5%, sapped by the technology sector amid drops in Hong Kong and China. The overall regional loss was smaller than Thursday’s slide of more than 3.5% in the S&P 500 index and 5% in the Nasdaq 100 gauge. U.S. and European futures dipped.
Australian debt and Treasuries extended a tumble that’s lifted the U.S. 10-year yield past 3%. A dollar gauge neared a two-year high and the yuan retreated.
Risk aversion has swept away a relief rally in the wake of the Federal Reserve decision Wednesday. The U.S. central bank raised interest rates by the most since 2000 while pushing back against talk of super-sized increases.
That led to temporary respite in markets as traders pared the most aggressive rate-hike bets but sentiment quickly skidded again on the cold reality of tightening financial conditions. The war in Ukraine and China’s Covid outbreak are also stirring angst and stoking concerns about the risk of a recession.
Elevated commodity prices are feeding into rising costs. . on supply concerns stemming from a European Union proposal to sanction Russian oil.
Meanwhile, China reaffirmed its preference for a strategy of lockdowns to eliminate Covid despite the economic cost. Top leaders warned against questioning President Xi Jinping’s so-called Covid Zero strategy.
Separately, the nation ordered central government agencies and state-backed corporations to replace foreign-branded personal computers with domestic alternatives within two years.
Later Friday, the U.S. jobs report may show that rising wage costs are adding to the inflationary pressures that have been undermining market sentiment.
