EU money supply in Euro area; UK business finance review; Italy
non-EU foreign trade; trading updates from TotalEnergies,
Market volatility may persist in European markets on Tuesday.
Asian stock benchmarks were mixed; Treasury yields and the dollar
pulled back slightly; while oil and gold advanced.
European stock futures were slightly firmer, though market
volatility is likely to continue amid a deteriorating economic
outlook and tumult in the currencies and fixed-income markets.
U.S. stocks extended their decline Monday and the Dow Jones
Industrial Average slid into a bear market, reflecting investor
concern about the pace of global growth and the price of
central-bank efforts to slow inflation.
Turbocharged volatility has rattled everything from stocks to
currencies to commodities in recent weeks.
"This is a very dangerous period of time for markets across the
board," said Gregory Faranello, head of U.S. rates at AmeriVet
Securities in New York.
"Financial conditions are tightening extremely rapidly --
whether it's dollar strength, credit spreads, or equities. Real
interest rates in the last couple of weeks are moving extremely
aggressively higher, which will ultimately have economic
"Liquidity is drying up very rapidly here, too," Faranello
Read: First Thing Fed Breaks With Higher Rates May Be the
The dollar weakened slightly in Asia, though a further rise in
financial-market volatility could lead to more U.S. dollar strength
due to its safe-haven status, CBA said.
Meanwhile, the U.S. dollar's unrelenting surge is raising
worries over corporate earnings, warned Morgan Stanley chief equity
strategist Michael Wilson, who noted that similar performances by
the currency have historically led to some kind of financial or
"The recent move in the U.S. dollar creates an untenable
situation for risk assets that historically has ended in a
financial or economic crisis, or both," wrote strategists led by
"While hard to predict such events, the conditions are in place
for one, which would help accelerate the end to this bear
Sterling could face further turbulence without any immediate
action by the Bank of England to steady market nerves following
Friday's controversial UK budget statement, Monex Europe said.
In a statement responding to sterling's heavy losses after the
budget announcement, BOE Gov. Andrew Bailey said the bank would
fully assess at its next policy-making meeting the budget
statement's demand and inflation impact.
"By categorically ruling out an inter-meeting rate hike, the
Bank of England is playing a dangerous game with markets," Monex
"Although it has shored up some confidence in the pound for the
time being, we think the verbal measures taken are piecemeal. In
the absence of any tangible inter-meeting intervention, we expect
volatility to remain high."
Treasury yields largely pulled back early Tuesday after surging
Global bond yields had continued to move higher as the prospect
of tighter monetary policy to combat inflation, along with fears in
the U.K. about increased issuance to fund fiscal splurges, damped
investor appetite for fixed-income assets.
This year "has been defined by global inflation pressures and
the measures being taken by authorities to counteract that
inflation pressure. For months, that story has been dominated by
the Fed, with the rest of the world struggling to keep up," said
Nat West Markets.
"But one has to wonder if these past few days mark a bit of a
turning point away from the specifics of the Fed as the dominant
market driver and towards the global response to the Fed's torrent
pace of easing," Nat West said, with particular focus currently on
Read: Global Bonds Are in First Bear Market in 76 Years
Oil futures edged higher in Asia, after prices fell overnight to
their lowest since January.
CBA thinks a synchronized economic slowdown is expected across
major commodity consumers globally.
"Most of that can be attributed to the forecast of weaker
economic growth from higher interest rates to contain inflation,"
"Global macro risks and energy policy risk across Europe
continue to support the U.S. dollar, making oil even more expensive
in European markets already struggling with inflation and leading
to further deterioration in oil demand outlooks," DTN said.
Gold prices advanced early Tuesday, though a stronger USD could
continue to weigh on the precious metal.
"The move in the dollar is not over and that should keep the
pressure on bullion," Oanda senior market analyst Edward Moya says
in a note.
Meanwhile, ANZ said investors are the most bearish on gold in
almost four years as central banks increase interest rates to tame
"Its status as a haven asset in times of economic distress has
failed to stem the flow of selling," said ANZ.
Fitch Solutions downgraded its 2022 average copper-price
estimate to $8,800 a metric ton from $9,470 a ton previously,
citing weakening investor sentiment and falling demand as global
"Nevertheless, persistent supply issues in Latin America will
prevent prices falling much further, and we expect copper to remain
elevated by historical standards, averaging around $7,500/ton over
Q422," Fitch Solutions said.
It projected a slight market surplus in 2022, but tipped a
return to deficit in 2023 on a demand recovery.
Iron-ore futures rose in China, extending gains amid signs of
More steel mills have increased production this week, while port
inventories of the raw material have fallen by a relatively large
extent given restocking demand ahead of China's National Day
holiday in October, Citic Futures said.
With the Chinese economy expected to gradually stabilize for the
rest of the year, demand for ferrous metals could recover, Citic
TODAY'S TOP HEADLINES
World Bank Cuts China Growth Forecast as Covid-19, Real-Estate
Crunch Take Toll
SINGAPORE-The World Bank said it expects developing economies in
East Asia to grow faster than China this year for the first time
since 1990, as the world's second-largest economy struggles with a
real-estate crunch and the government's zero-tolerance approach to
The Washington, D.C.-based lender cut its forecast for Chinese
growth this year but said it expects growth among 22 neighboring
economies to more than double in 2022 compared with the pace they
notched last year, as countries benefit from dismantling most
Covid-19 restrictions and a revival in tourism.
China's Industrial Profits Drop Further
China's industrial profits fell 2.1% in January-August, widening
from the 1.1% drop recorded in the first seven months of the year,
data from the National Bureau of Statistics bureau showed.
The bigger year-over-year decline comes after China reported
improved factory production, which rose 4.2% on year in August
compared with July's 3.8% growth.
Kurds in Iran Face Establishment Fury as Unrest Spreads
Iran's nationwide crackdown on antigovernment protests has been
especially severe against its Kurdish minority, with drone and
artillery strikes against separatist groups and deadly clashes in
Kurdish-dominated cities and towns where the unrest first arose,
Iranian authorities have blamed Kurdish activists and
separatists based in neighboring countries for fomenting protests
that erupted in Iran's Kurdish region following the death in police
custody of Mahsa Amini, a 22-year-old Kurd arrested in Tehran for
allegedly violating the country's strict Islamic dress code.
Vladimir Putin Grants Edward Snowden Russian Citizenship
Edward Snowden, the former U.S. intelligence contractor who
leaked files regarding U.S. surveillance programs, was granted
Russian citizenship by President Vladimir Putin, according to the
Mr. Putin signed the order granting Russian citizenship to Mr.
Snowden, along with 71 other individuals, on Monday. Mr. Snowden
said in October 2020 that he and his wife were applying for dual
Russian citizenship to remain close to their son.
Ukraine's Zelensky Urges Russians to Keep Protesting
Kyiv reiterated calls for Russian men summoned to fight in
Ukraine to lay down their arms as soon as they arrive in the
country, as protests against mobilization continued in Russia and
authorities there sought to curb an exodus of fighting-age
In a video address late Sunday, Ukrainian President Volodymyr
Zelensky called on Russians to continue protesting against the
draft and urged them to desert or give themselves up to Ukrainian
troops as prisoners of war. Ukraine has pledged to treat Russian
Crédit Agricole Subsidiaries to Settle Alleged Violations of
Two subsidiaries of French bank Crédit Agricole Group's
corporate and investment banking arm have agreed to pay more than
$1.12 million in civil penalties to settle alleged violations of
U.S. sanctions, the Treasury Department said on Monday.
CA Indosuez Switzerland SA, a Switzerland-based indirect
subsidiary of Crédit Agricole Corporate and Investment Bank, has
agreed to pay $720,258 for allegedly violating sanctions against
Cuba, Iran, Sudan and Syria as well sanctions related to the
annexation of Ukraine's Crimea region, according to the Treasury's
Office of Foreign Assets Control.
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Expected Major Events for Tuesday
06:00/SWE: Aug PPI
06:00/SWE: Aug Foreign trade
08:00/ITA: Aug Foreign Trade non-EU
08:00/EU: Aug Monetary developments in the euro area (M3)
08:30/UK: 2Q Business Finance Review
12:00/HUN: Sep Hungarian interest rate decision
23:01/UK: Sep Shop Price Index
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(END) Dow Jones Newswires
September 27, 2022 00:17 ET (04:17 GMT)
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