Black Friday! European and American stock markets fell sharply, British stocks and bonds killed three times

time:2023-03-22 author:Garbage
Black Friday! European and American stock markets fell sharply, British stocks and bonds killed three times

Stimulated by the bleak economic data in the euro zone overnight and the UK's strongest "tax cut plan", European and American markets fell across the board on Friday and suffered "Black Friday". Germany's DAX index and the UK's FTSE 100 index fell nearly 2%, and the French CAC 40 index fell. More than 2%, the Stoxx 600 index fell more than 2%, the largest decline since June 16. In the bond market, as the risk aversion in the market intensified, euro zone government bonds were sold frantically, and bond market yields rose collectively. Stocks and bonds exchanged three killings, the pound fell more than 3%, the largest decline in two and a half years, and the 10-year British bond yield recorded the largest increase since 1998. The dismal performance of European stocks began to spread to US stocks, and the Nasdaq fell 3% during the session, and the benchmark The general market closed close to the trough of the year. The 10-year U.S. bond yield hit a new high in more than ten years. .

Stimulated by the dismal economic data in the euro zone, European and American markets fell across the board

In terms of economic data, the PMI in the euro zone hit a 20-month low, falling below the line of prosperity and decline for three consecutive months. The contraction of Germany, the largest economy, has intensified. The service PMI of the United Kingdom in September fell below the line of prosperity and decline, the lowest since January 2021. The Stoxx 600 index fell directly into a bear market, euro zone government bonds were sold frantically, and the market entered a safe-haven mode. According to data released by IHS Markit, the initial value of the euro zone's manufacturing PMI fell from 49.6 in August to 48.5 in September, lower than the expected 48.8 and a 27-month low. The initial value of the service PMI fell from 49.8 in August. September's 48.9, lower than the expected 49.1, hit a 19-month low. The initial value of the composite PMI was 48.2, unchanged from expectations, lower than the previous value of 48.9, a 20-month low. The largest economy Germany's PMI decline accelerated in September, The economic outlook is bleak.Data showed that Germany's initial manufacturing PMI fell to 48.3 in September from a final value of 49.1 in August, which was in line with expectations and hit a 27-month low; 45.9, a new 28-month low, the preliminary composite PMI fell to 45.9, a new 28-month low from the final value of 46.9 in August. S&P Global pointed out that as companies report worsening business conditions, and prices related to soaring energy costs The pressure is intensifying, and a recession in the euro zone is coming. After the opening of the US stock market, the US Markit manufacturing PMI in September was still below 50 and in the contraction range, but the PMI and the service industry PMI were both higher than expected. Good economic news became bad news for the stock market, and the Fed continued to Violent interest rate hikes add to the bargaining chip. At a time when U.S. stocks and U.S. debt are plummeting, the top and second leaders of the Federal Reserve seem to have no plans to "save the market". On the afternoon of Friday, 23rd, Eastern Time, he gave a welcome speech to Fed Listens, an event for the Federal Reserve to listen to public opinions. At the same time, Chairman Powell Powell said that after the disruption caused by the new crown pneumonia epidemic, the US economy may enter a "new normal", "We continue to deal with a series of extraordinary disruptions." He also said that the Fed is committed to using the public Multitool. In his address, Powell did not address the outlook for interest rates or any details about the economic outlook. The three major U.S. stock indexes fell by at least 3% when they refreshed their daily lows during the session, and the Fed’s senior officials did not raise interest rates and hovered at low levels. All sectors of the European and American stock markets were wiped out on Friday, led by the energy sector, which was hit by the sharp drop in crude oil. Energy stocks also topped the list for the week. UK unveils biggest tax cut in half a century! British stock and debt exchange three kills Britain's plan announced on Friday proposes to stimulate the economy with 161 billion pounds of tax cuts and regulatory reforms in the next five years. Economists believe that these measures will increase government debt, fuel high inflation, and kill British stocks and bonds. GBP/USD hit a new low since 1985 for the third consecutive day, falling more than 3% on the day, the biggest drop in two and a half years; the 5-year British government bond yield rose close to 60 basis points during the day, the largest increase in history, the benchmark 10-year British bond yields rose more than 30 basis points on the day, also the largest one-day rise. The tax cuts are said to be larger than those introduced under Mrs Thatcher in 1988 and are the largest in half a century. The new British Finance Minister Kwasi Kwarteng announced the historic plan on September 23, local time. Specific measures include: cancelling plans to raise corporate tax to 25% and maintaining it at 19%, the lowest level among G20 countries; scrapping the 1.25% increase in national insurance tax; reducing the basic income tax rate from 20% to 19%; remove the top tax rate of 45% for workers earning more than £150,000 a year and set it at 40%. Slashing stamp duty, which it says will ease the burden on 200,000 annual homebuyers; creating new "investment zones" to ease regulations on entrepreneurs; taking steps to reduce land-use planning restrictions; issuing tourist tax rebates; eliminating alcohol Similar tax hike plan; remove cap on banker bonuses and impose 8% tax on bank profits. Kwarteng claims the tax cuts will cost a total of £45bn by 2026. The subsidy to household energy bills announced by Prime Minister Truss will cost £60bn over the next six months. Analysts also predict that the package of subsidies and tax cuts will cost the British government more than £150 billion over the next few years, which will be largely supported by borrowing. The government said it would borrow an additional £72.4bn to fund the scheme.

Deutsche Bank issued a warning after the collapse of British sterling: urgent additional rate hikes are necessary to avoid disaster

Deutsche Bank foreign exchange expert, the bank's global head of foreign exchange research George Saravelos believes that in the After a "historic drop" in both sterling and British government bonds on Friday, the Bank of England will now need to take an unusually large rate hike to restore market confidence. In a report released Friday on the 23rd local time, Saravelos wrote that the market has given a very strong signal that it is no longer willing to fund the UK's external deficit position at the current UK real yield and exchange rate. The current situation has made clear demands for policy: the Bank of England will raise interest rates significantly between (planned) meetings as soon as next week (in a separate meeting) in order to regain the trust of the market. Saravelos also called on the Bank of England to send a "strong signal" that its "intent to 'whatever it takes' to rapidly reduce inflation and bring real yields into positive territory." The media pointed out on Friday that current market pricing shows that investors have The Bank of England is fully expected to raise rates by 100 basis points after its next meeting in November. Moreover, traders even estimate that the probability of the Bank of England raising interest rates by 125 basis points in November has reached 50%. ⭐Starred Wall Street news, good content not to be missed ⭐This article does not constitute personal investment advice, nor does it take into account the special investment goals, financial situation or needs of individual users. Users should consider whether any opinions, views or conclusions contained herein are appropriate to their particular circumstances. There are risks in the market, investment needs to be cautious, please make independent judgments and decisions.
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