Summary
CompaniesWorld shares on brink of 10-day losing streak
Bond market borrowing costs push higher after leap in oil
Dollar/yen close to testing 150
Evergrande shares suspended in Hong Kong
LONDON, Sept 28 (Reuters) – World stocks were on track for their longest losing streak in two years on Thursday as the sight of oil prices nearing $100 a barrel compounded concerns about persistently high global interest rates.
There was brief respite from the dollar’s strength in currency markets /FRX, but it was Wednesday’s big drop in U.S. crude stocks that heightened nerves about another supply-side shock just when the global economy needs it least.
U.S. crude had hit $95 a barrel for the first time since August 2022 and while both it and $97 Brent prices eased fractionally in London trading they were 30% higher than at the end of June.
Europe’s oil and gas stocks (.SXEP) were up 0.5% and close to their highest since 2014, whereas the prospect of higher energy costs and sticky inflation piled more pressure on bond markets.
Ten-year U.S. Treasury yields , which are the benchmark of global borrowing costs, were above 4.6% for the first time since 2007 having started September at 4%.
Triple-A Germany’s 2.93% yields hit their highest in 12 years before news that inflation there had slowed, while Wednesday’s announcement that Italy’s budget deficit is now widening again pushed its 2-year yields briefly to a 11-year high.
“What we have got is a beautiful inflection point,” Mizuho’s Head of Global Macro Strategies Trading, Peter Chatwell, said, explaining that markets were now sensing that both economic growth and inflation could stay strong next year.
“The repricing is applying some stress to credit spreads as well as other things,” Chatwell said. “If the higher rate environment persists it is potentially much more difficult to keep debt levels stable.”
Traders were also watching U.S. lawmakers’ efforts to avoid a government shutdown in Washington.
With European stocks in and out of the red (.STOXX) and U.S. S&P 500 futures barely budged , MSCI’s main global equities index which tracks 47 countries (.MIWD00000PUS) was in danger of a 10th straight daily fall, a losing streak not seen since 2021.
MSCI’s index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) had ended near a 10-month trough, while Japan’s Nikkei (.N225) fell 1.5% as investors there readied for the end of the quarter and offloaded stocks that went ex-dividend.
The strong dollar has the Japanese yen within a whisker of 150-per-dollar, seen as a level likely to provoke an official response or intervention.
Dollar/yen was hovering around 149.40 on Thursday. The euro was licking its wounds too at $1.0535, having dropped to a nine-month low of $1.0488 in the previous session. /FRXInstitutes in Germany predicted its economy will shrink 0.6% this year and Spanish data showed headline inflation rose to 3.5% this month due to the soaring cost of energy.
Focus in the U.S. session will be on the final reading of…
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