* The dollar index has reached a nine-month high.
* Oil and copper under pressure
* Futures in the United States are down roughly 1%.
Stocks plummeted, global bond rates fell, and the dollar rose to a nine-month high on Thursday, as a combination of Fed taper anxieties and COVID fears rocked equity markets, prompting a new rush into safe-haven assets.
Europe’s pan-regional STOXX 600 index fell for the first time in a month. Its 2% drop drove the global market index to a three-week low.
Futures in the United States indicated that more misery was on the way for Wall Street.
Commodities markets seem to be under pressure, with oil dropping for the sixth straight session and approaching three-month lows, and copper plummeting to its lowest level in more than four months.
The minutes of the Federal Reserve’s July meeting, released on Wednesday, revealed that officials planned to reduce assistance this year, despite disagreements over the labour market’s recovery and the amount of danger posed by increasing coronavirus infections.
The focus now moves to the Federal Reserve’s annual research conference next week in Jackson Hole, Wyoming, for hints on the central bank’s future actions.
SAFE HAVENS GLOW
Because of the rush to safe-haven assets, US Treasury rates have remained at historic lows, with the benchmark 10-year yield currently at 1.23%.
Eurozone government bond rates fell as well, with German 10-year bond yields, the bloc’s benchmark, falling a basis point to -0.49%, close to a six-month low set earlier this month.
Concerns that the economic recovery’s peak had passed loomed large, fueled by concerns about the spread of the Delta virus strain as well as supply chain difficulties.
The Nikkei 225 index in Japan dropped 1.1% to its lowest level since early January, headed by Toyota Motor, whose shares plunged on news that it may decrease output by 40% next month owing to a semiconductor shortage.
The fall in Asian markets to their lowest point this year has also alarmed policymakers. Taiwan’s Finance Ministry has contacted state-owned banks to advise them to purchase a “suitable” quantity of equities, citing individuals familiar with the situation.
“You can’t find a bull out there,” said Kay Van-Petersen, a global macro strategist at Singapore-based Saxo Capital Markets.
He said that “an accumulation of things,” ranging from the emergence of the Delta virus strain to a tech crackdown in China and concerns about Fed tapering, were enough to destabilize delicate sentiment.
Frayed nerves helped the safe-haven dollar, which climbed 0.35% to $1.167 per euro, reaching its highest level since November 2020, while the dollar index jumped 0.3%, also reaching a new high.
Norway’s crown fell 1.1% versus the dollar as the central bank maintained its benchmark policy rate at a record low of 0.0%, but also indicated it will adhere to its plan to hike interest rates next month as the economy recovers.
The CBOE Volatility Index, popularly known as Wall Street’s fear gauge, rose 3.66 points overnight to its highest level in almost a month, while the S&P 500 index dropped 1% to a two-week low.
Oil prices declined for the sixth day in a row, the worst losing trend since February 2020, with Brent oil falling over $2 a barrel to $66.37 and US crude down $2.2 to $63.32.
The higher dollar impacted gold, which fell 0.5% to about $1,776.66 per ounce.
