The dollar is rising, stocks are retreating due to fears of slowing growth through the Fed

Shares in Europe and Asia recovered earlier after China cut a key controlling borrowing rate to support its weakened economy, boosting early earnings on the Wall Exchange.

China has cut its key interest rate on five-year loans affecting mortgage prices by 15 basis points, stronger than expected as the government seeks to mitigate the effects of the economic downturn.

Yields on US Treasury bonds fell for the third consecutive session due to fears about growth prospects. The yield on the underlying 10-year bond fell 5.6 basis points to 2.799%.

Equity valuation should decline, and the expected return on investment, the discount rate, should increase, said Stephen Out, head of equity investment at Federated Hermes.

“The market is beginning to digest the idea that this could be a new world where the discount rate for risky assets is no longer zero,” Mr Out said.

“You can see that all these different sectors of the market are being hit at the same time, and this is very worrying for investors,” he added.

The pan-European STOXX 600 index closed with a previous increase of 0.73%. MSCI stocks from 47 countries fell 0.45% on the seventh consecutive week of decline, the longest losing streak since the index was launched in 1990.

Wall Bourse, Dow Jones Industrial Average fell 1.09%, S&P 500 lost 1.28% and Nasdaq Composite fell 1.83%.

Fed fund futures were stronger, suggesting that the US rate market deviated slightly from some of the more extreme estimates of rate increases. The market of rates estimated the rate of Federal funds at 2.783% at the end of next year from the current level of 0.83%. Two weeks ago, this figure could reach 2.9%.

The dollar has recovered some of its recent losses against the euro, but continues to see its worst weekly loss against the single currency since early February, and investors are wondering if the dollar’s rise in the month has ended.

In recent months, the dollar has supported security flight amid market turmoil amid fears of rapid inflation, the Fed’s hawk and the war in Ukraine.

The dollar index rose 0.136%, the euro fell 0.29% to 1.0555 dollars. The Japanese yen strengthened by 0.01% to 127.78 per dollar.

Eurozone bond yields were higher after two days of sharp declines, as risk sentiment improved after the rate cut in China.

German 10-year government bond yields fell 1.2 basis points to 0.932%, well below the eight-year high reached last week (1.189%).

At the July meeting of the European Central Bank, markets set prices at 38 basis points. This suggests that a price increase of 25 basis points is fully taken into account, and markets see a 50/50 chance of an additional increase of 25 basis points.

Oil prices remained unchanged for almost a week as the European Union plans to ban Russian oil and a slowdown in economic growth is likely to affect demand.

US oil rose 0.08% to $ 112.30 a barrel, while Brent fell 0.36% a day to $ 111.64.

Gold fell 0.1% to $ 1,840.71 an ounce as the dollar jumped from a two-week low. But the safe metal is still likely to post its first weekly gain in five years.

Bitcoin fell 4.28% to $ 28,994.71.

(Chart – global stocks lose $ 13 trillion in value:


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