Stocks extend slide, dollar climbs on rate hubbub

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SYDNEY : Asian shares slid on Monday as the mounting risk of more aggressive rate hikes in the United States and Europe shoved bond yields and the dollar sharply higher, and tested equity and earnings valuations.Federal Reserve Chair Jerome Powell's promise of policy 'pain' to contain inflation quashed ho

SYDNEY : Asian shares slid on Monday as the mounting risk of more aggressive rate hikes in the United States and Europe shoved bond yields and the dollar sharply higher, and tested equity and earnings valuations.

That triggered a sharp fall in Euribor futures as markets priced in the risk the ECB could hike by 75 basis points next month. Futures are now pricing in around a 64 per cent chance the Fed will hike by 75 basis points in September, and see rates peaking in the 3.75-4.0 per cent range. MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.9 per cent. Japan's Nikkei dropped 2.8 per cent, while South Korea shed 2.3 per cent.

All of which benefited the safe-haven U.S. dollar as it shot to a fresh two-decade top of 109.40 against a basket of major currencies, breaching the previous high from July.

 

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