Risk assets tumble as Fed, China cause concern
Risk assets from European equities to Asian stocks and cryptocurrencies fell on Friday as worries about China and higher global interest rates sapped sentiment.
The benchmark Stoxx 600 dropped 0.4%, poised for its third weekly decline — the longest run in almost a year. A gauge of Asia’s shares were on pace for the worst week in eight, with equity benchmarks for Japan, China and South Korea all lower.
Global markets took a beating this week amid the prospect of entrenched inflation and bond yields at levels last seen before the financial crisis. At the same time, concern over China’s faltering economic growth and widening housing crisis quashed appetite for risk and fueled signs of contagion.
The rise in bond 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 and volatility is still relatively low.”
US Treasuries took a pause from this week’s selloff. Yields on the bonds inched lower across the curve after those on the 10-year note on Thursday came close to their October peak, the highest since 2007.
Contracts for the Nasdaq 100 slid 0.2%, after the index notched its worst three-day slide since February. Futures for the S&P 500 were flat after the index declined 0.8%, also its third daily decline.
Bitcoin fell 4.5% on Friday, and was headed for its biggest weekly decline in three months, after touching a low of $25,314. Elon Musk’s SpaceX has sold Bitcoin, according to The Wall Street Journal, adding to the selling pressure.
“Markets are being hit by a perfect storm amid surging rates, worsening data in China and poor summer liquidity,”
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