In Asia, stock markets experienced a decline, contrasting with a more stable showing in US equity futures and Treasuries. This trend coincided with a surge in oil prices, reinforcing the notion of a prolonged period of higher prices, and putting additional pressure on global markets.
The US benchmark oil price reached $95 per barrel for the first time in over a year, following a decrease in stockpiles at a major storage hub. This development raised concerns about persistently high inflation, maintaining the 10-year Treasury yield at around 4.6%, its highest point since 2007.
Futures for US and European equities saw modest gains, while Asian shares struggled to avoid further losses. Indices in Japan, New Zealand, and Hong Kong experienced declines of over 1%, contributing to a drop in a critical regional shares index.
A widely-watched measure of global equities is on the verge of recording its tenth consecutive loss, matching its most significant losing streak in twelve years.
September has reaffirmed its reputation for volatility, emerging as the most challenging month for global stocks in a year, and the toughest for global bonds since February. The 10-year Treasury yield has experienced its most substantial increase since September of the previous year, and US corporate bonds are now in negative territory for 2023.
In China, mainland shares edged downwards as onshore markets prepared for an extended break, set to close on Friday and reopen on October 9th. Chinese developers continued to face losses after hitting levels not seen since 2011 on Wednesday. Trading in China Evergrande Group was halted in Hong Kong, and bondholders of Country Garden Holdings Co Ltd reported delays in receiving a coupon due on Wednesday.
The Bloomberg dollar index saw a slight dip after reaching its highest point since November. This index had seen a six-session consecutive climb, its longest streak of gains in a year. Meanwhile, the yen strengthened marginally on Thursday, though it remained near 150 per dollar.
Japan’s 20-year yield rose to its highest level since 2014, while Australian and New Zealand rates also saw gains.
Later on Thursday, Fed Chair Jerome Powell, along with a handful of other central bank officials, are scheduled to speak. The data set for release includes US gross domestic product and initial jobless claims, ahead of the personal consumption expenditures price index on Friday, which is the Fed’s preferred measure of inflation.
Global stocks also face the potential risk of further sell-offs tied to a substantial options position held by a JPMorgan Chase & Co. equity fund. Tens of thousands of protective put contracts held by the fund are set to expire on Friday, with a strike price not far from the current level of the S&P 500, potentially leading to market disruptions.
In other markets, gold remained relatively unchanged after a series of declines earlier in the week, while Bitcoin traded above $26,000.
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