Negative sentiment on global equity markets: the Nikkei 225 index on the Tokyo stock exchange drops 2.5%, Seoul sinks with a decline of more than -3%, Sidney -1.26%, while the Shanghai and Hong Kong stock exchanges limit the discounts.
Futures on the main US stock indices were negative, after the umpteenth closing down on Wall Street, which saw the Dow Jones capitulate by 486 points to the new intraday low of the year, the Nasdaq slide by 1.8% and the S&P 500 also hit the lows since June with a loss of 1.7%.
Maximum attention today to the trend of the European markets and of Piazza Affari in particular, in the wake of yesterday’s Italian political elections, Sunday 25 September, which gave the victory to the party of Giorgia Meloni, Brothers of Italy.
The fear of interest rates remains the protagonist on the markets after last week the Fed led by Jerome Powell carried out its third consecutive monetary tightening of 75 basis points, bringing US fed funds rates to a record since 2008, in the range between 3 % and 3.25%, with the aim of stopping galloping inflation.
The bullish march in Treasury yields continues: two-year US government bond rates, those most sensitive to the Fed’s monetary policy decisions, have soared in the last few hours to 4.226%, a record level since October 2007. I 10-year Treasury rates travel over 3.829%, the highest since 2011.
Under pressure on the foreign exchange market the continued collapse of the pound which, in the last few hours, has plunged to a new record low, down 4% to $ 1.0382.
The British government led by the new premier, Liz Truss, has announced a comprehensive tax reform and investment incentives, with the aim of strengthening the country’s economic growth.
Speaking to the House of Commons, Finance Minister Kwasi Kwarteng said the government wants “a new approach to a new era focused on growth” and is targeting an economic growth rate of 2.5% in the medium term. “We believe that high taxation reduces incentives to work, discourages investment and hinders business,” continued Kwarteng. But the tax reform was quickly branded as a save-the-rich reform and promptly fueled fears about the UK debt trend, resulting in a plunge in sterling and a boom in UK government bond yields. The euro also fell significantly today, losing more than half a percentage point against the dollar at 0.9634.