London — Stocks fell again on Monday and the dollar rocketed to a new two-decade high as worries about higher interest rates and a tightened lockdown in Shanghai deepened investors’ fears that the global economy is headed for a slowdown.
There was plenty more for investors to worry about on Monday aside from tightening financial conditions. Wall Street headed for another weaker open with the S&P 500 stock futures down 1%, while Nasdaq futures shed 0.9%. US 10-year bond yields reached a new three-and-a-half-year high of 3.179%.MSCI’s main emerging market stocks index fell to its lowest level since July 2020.MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.27% and Japan’s Nikkei 2.53%. Chinese blue chips eased 0.8%, while in offshore markets the yuan fell to 6.765 to the dollar, another 18-month low.
“Risk appetite is fragile and yield spreads continue to suggest further upside on the dollar Index,” said Sean Callow, a senior forex strategist at Westpac. The expectation that the Fed will move more aggressively in raising interest rates are supporting the dollar, as is a sense among investors that the US economy will hold up better than a eurozone hit hard by the fallout from the war in Ukraine.