Stocks slumped, putting a global benchmark on track for the biggest weekly loss since March, as worries about China and higher global interest rates sapped sentiment.
(Bloomberg) — Stocks slumped, putting a global benchmark on track for the biggest weekly loss since March, as worries about China and higher global interest rates sapped sentiment.
The Nasdaq 100 slumped 0.8%, outpacing the decline of S&P 500 peers and building on the selloff that’s stretched across risk assets. Bitcoin slid as much as 8% and oil was set for its first weekly loss since June.
Meanwhile, Treasuries were mixed. The yield on the 10-year, pulled back from Thursday’s levels that were approaching the highest since 2007. Global bonds staged a rebound on speculation losses may be overdone as UK and German bonds advanced.
Investors are still contending with the risks of entrenched inflation and rates that have moved sharply higher in recent weeks. China’s property crisis and troubles in the shadow banking system have also added to the anxiety in markets and raised questions about possible spillover effects.
The rise in yields “has the ability to dent what has been a very resilient year for risky assets,” said Tim Graf, head of macro strategy for EMEA at State Street Global Markets. “We are in the seasonally weakest time of the year for equities.”
Read More: Stocks Face More Losses as China Woes Grow, BofA’s Hartnett Says
In another sign of nervousness, the Cboe Volatility Index climbed above 18, the highest level since May. Bank of America Corp.’s Michael Hartnett warned that stocks may drop another 4%, given China’s economic turmoil and jump in bond yields.
Options expiration is also catching the attention of traders today. There’s some $2.2 trillion of longer-dated contracts tied to stocks and indexes are scheduled to mature on Friday, according to an estimate by Rocky Fishman, founder of derivatives analytical firm Asym 500.
Read More: BofA’s Warning of a ‘5% World’ Sinks In as Bond Yields Surge
The global retreat in fixed-income was turbocharged by Wednesday’s publication of minutes from the last Federal Reserve meeting that suggested officials are considering tighter policy, slamming hopes that the central bank was done raising rates. Now, investors are looking to next week’s gathering of policymakers at Jackson Hole in Wyoming to gauge Fed sentiment.
“Markets are being hit by a perfect storm amid surging rates, worsening data in China and poor summer liquidity,” Emmanuel Cau, a strategist at Barclays Plc, wrote in a note.
In other markets, Bitcoin traded around $26,000. Elon Musk’s SpaceX sold the cryptocurrency after writing down $373 million, The Wall Street Journal reported.
Some of the main moves in markets:
Stocks
- The S&P 500 fell 0.7% as of 9:31 a.m. New York time
- The Nasdaq 100 fell 0.9%
- The Dow Jones Industrial Average fell 0.5%
- The Stoxx Europe 600 fell 1.2%
- The MSCI World index fell 0.8%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.1% to $1.0860
- The British pound fell 0.2% to $1.2724
- The Japanese yen rose 0.3% to 145.43 per dollar
Cryptocurrencies
- Bitcoin fell 5% to $26,247.58
- Ether fell 2.4% to $1,675.66
Bonds
- The yield on 10-year Treasuries was little changed at 4.27%
- Germany’s 10-year yield declined eight basis points to 2.63%
- Britain’s 10-year yield declined four basis points to 4.71%
Commodities
- West Texas Intermediate crude rose 0.5% to $80.80 a barrel
- Gold futures rose 0.4% to $1,923.40 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Alice Atkins, Richard Henderson and Cecile Gutscher.
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