Stocks falter as economic worries nag, big rate hike lifts kiwi dollar

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World stock markets stumbled on Wednesday as signs that the economic outlook is weakening spurred caution, while a bigger-than-expected interest-rate hike from New Zealand lifted the kiwi dollar.

pulled further away from Tuesday's almost seven-week highs, while Asia trade was thinned by holidays in Hong Kong and China.

Interest rate futures have rallied strongly in recent weeks as traders bet that turmoil in the banking sector will tighten up on lending anyway and save the need for the Federal Reserve to do the job.a better-than-even chance that the Fed has finished raising rates and more than 60 bps in cuts this year.

In a note, Pictet Asset Management chief strategist Luca Paolini said that with focus turning from inflation to growth risks, Pictet had upgraded U.S. equities to neutral from underweight.The U.S. dollar index was stuck at two-month lows and the currency fell to its lowest since August 2021 against the Swiss franc at 0.9049 on a view that the end of the U.S. Federal Reserve tightening cycle was drawing nearer.

Two-year Treasury yields were 3 bps higher at 3.87% but well below highs above 5% seen just before the collapse of Silicon Valley Bank last month .

 

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