Many factors, including the rising tensions in the Middle East, the highest US Treasury yields in decades, the US Federal Reserve pointing towards a possible interest hike, and Morgan Stanley cautioning investors against the Chinese markets, hurt the global indices this week.
Leading World Stock Market Indices Weekly Change
|Global Indices||Weekly Change (%)|
World Market Index: US Markets
The 10-year Treasury Yield surge drove the US stocks down on Friday.
This week, the benchmark 10-year Treasury yield crossed 5% for the first time in sixteen years, raising the prospects of increased rates on auto loans, credit cards, mortgages, etc. It also offers investors an attractive alternative to stocks.
Around 5 pm ET on Thursday, the 10-year yield hit 5.001% for the first time since July 2007.
The 30-year US Treasury also hit its highest level since July 2007, while the 30-year fixed mortgage rate reached 8%, it’s highest since 2000.
The Dow Jones global stock index ended at 33,127.28, losing 0.86% or 286.89 points, driven down further by American Express following a mixed earnings report. WoW, it fell 1.61%.
The S&P 500 closed Friday at 4,224.16, down 53.84 points or 1.26%. WoW, it dropped 2.39%.
The NASDAQ closed the week at 12,983.81, down 1.53% or 202.37 points. WoW, it fell 3.16%.
World Market Index: European Markets
- Mining and Financial stocks drove the UK’s FTSE 100 down on Friday, ending another volatile week dominated by fears of tightening monetary policies and an escalating Middle East conflict.
- The global stock market index fell by 1.32%, its worst weekly performance in two months.
- Financial stocks Prudential and HSBC fell 3.4% and 3.9%, respectively.
- The FTSE 250 fell for the fifth consecutive week, shedding 1.1%.
The French benchmark index fell by 105.15 points or 1.54% to close the week at 6,816.22 on Friday. WoW, it was down by 2.67%.
The German DAX closed Friday at 14,798.47, down 1.67% or 246.76 points. WoW, it was down 2.56%.
World Market Index: Asian Markets
Conflicting signals from Federal Reserve chairman Jerome Powell on interest rates drove the Wall Street indices down, causing a chain reaction across global markets.
Chairman Jerome Powell of the Federal Reserve remarked that inflation was still too high, raising speculation of a potential interest rate hike.
An analyst at Daishin Securities, Lee Kyung-min, said, “Powell’s statement and a spike in longer-term bond yields weighed heavily on investor sentiment.”
The Indian benchmark index closed the week at 19,426.50, down 95 points or 0.49%. WoW, it dropped by 1.39%.
- According to Japanese inflation data, the price increase is slowing down but is still above the 2% target rate of the Bank of Japan (BoJ), as the Nikkei 225 dropped by 0.5%. Consumer prices increased 3% YoY in September against 3.2% in August.
- Not including energy and fresh food, core inflation stands at 4.2%.
- ING Economist Min Joo Kang said, “We believe that the [Bank of Japan’s] rate hike will only come in the second quarter of next year when the GDP output gap turns positive, and the BoJ can confirm another solid increase in wages. Before that, however, the central bank will likely provide proper guidance on its policy stance to the market.”
- Persistent apprehensions driven by geopolitical tensions and US interest rates resulted in Singapore’s closing in the red on Friday.
- The Straits Times Index (STI) ended the week at 3,076.69, down 22.91 points or 0.7%. WoW, it fell by 3.42%. Three hundred forty-one components of the world market index fell while 256 enjoyed gains as 1.5 Bn shares amounting to $1.1 Bn were traded.
- STI’s top loser was CapitaLand Ascendas Reit, shedding 2.8% to $2.48. The biggest winner was Keppel Corp, gaining 1.3% to reach $6.33 following its positive market update the previous day.
- The most heavily traded counter on Friday, Seatrium, saw 415.2 Mn shares change hands as it closed flat at 11.7 cents.
- All three local banks closed in the red, with OCBC losing 0.3% to $12.79, UOB shedding 0.4% to $27.76, and DBS Bank dipping 0.3% to $33.08.
Widespread trader speculation over the US Federal Reserve interest rates and the escalating Israel-Hamas conflict drove Hong Kong shares down on Friday, with the Hang Seng closing at 17,172.13, down 0.72%.
The Taiwanese benchmark index closed the week at 16,440.72, down 12.01 points or 0.07%. WoW, it lost 2.04%.
- Worries over the US Federal Reserve’s monetary policies led the Korea Composite Stock Price Index (KOSPI) to lose 40.80 points or 1.72%, closing at 2,375.
- This is the global share index’s lowest point since March 14, when it finished at 2,348.97.
- The local currency gained 5 won over its previous session to rise to 1,352.4 against the US dollar.
- Battery and tech stocks were the biggest losers in the Seoul markets. Samsung Electronics fell to 68,800 won, dropping 1.01%, while LG Electronics fell to 105,400 won, dropping 0.75%.
The global market index of Thailand dropped 1.69% or 23.69 points to close at 1,399.35 on Friday. WoW, it was down 1.95%.
The Indonesian benchmark index ended Friday at 6,849.17, up 2.74 points or 0.04%. WoW, it lost 1.12%.
- Morgan Stanley has warned investors that the current housing crisis, economic headwinds, and geopolitical tensions have led global funds to dump Chinese shares. Efforts by the Xi Jinping government to avoid deflation and stabilise the property sector have failed to achieve the desired objectives.
- Foreign investors are now less than $9.6 Bn or 70 Bn Yuan short of making 2023 the first year they sell Chinese shares on a net basis since trading links opened in 2016.
- On Friday, the Shanghai Composite fell by 22.33 points or 0.75% to close at 2,983.06. WoW, it lost 3.4%.
According to Stephen Innes, Managing Partner at SPI Asset Management, the worsening geopolitical tensions and the rising US bond yields are hurting the world indices. He said, “Investors will be reluctant to take on stock market risk while opting for the safety of last-resort hedges like the Vix (the Chicago Board Options Exchange’s CBOE Volatility Index), oil and gold.”
Commenting on the US markets this week, the Chief Investment Officer of CIBC Private Wealth Management, David Donabedian, said, “The stock market is watching the bond market and doesn’t like what it sees…yields are rising, even with the relatively good news about inflation. This is the primary reason the stock market has been weak.”
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