With the euro steadying after dropping to a two-decade low and oil back above $100 a barrel following a near 10% plunge a day earlier, tentative calm returned to global markets on Wednesday. The single currency traded at $1.025, a fraction above its weakest level since late 2002 touched overnight as fears of a slowdown and rising commodity prices weighed.
As reported by Reuters, government bond yields across the euro area nudged up too, and European stocks also made gains, while Brent crude bounced almost 3% after slumping on Tuesday 9.5% to its lowest in 2-1/2 months. Nevertheless, fears over growth that have stalked markets in recent were lingering, investors said.
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“The market moves over the past couple of days have been classic recessionary pricing,” said Hugh Gimber, global market strategist at J.P. Morgan Asset Management. “Investors are really becoming more cognizant of the risks.” The dollar index was just off its overnight 20-year peak at 106.57, with safe havens in demand including the Japanese yen in demand. The MSCI world equity index, which tracks shares in 50 countries, was up 0.1%. S&P 500 futures pointed to gains of about 0.3% on Wall Street. Earlier, MSCI’s index of Asia-Pacific stocks outside Japan fell 1%, led by a 2% drop in Taiwan’s benchmark index.
Britain’s pound traded near a two-year dollar against the dollar as Prime Minister Boris Johnson clung to power, wounded by the resignation of ministers and with a growing number of lawmakers calling for him to go. Sterling was down 0.1% against the dollar at $1.1912, just off the $1.1899 touched a day earlier, its lowest since March 2020. Uncertainty over Europe’s gas supply has led to the latest round of growth worries, sending prices rocketing. Benchmark Dutch gas prices have doubled since the middle of June, as reported by Reuters.
(with inputs from agencies)
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