Stocks fall, oil jumps on shaky start to Q4

LONDON, Oct 3 (Reuters) – The final quarter of the year got off to a shaky start on Monday, with global stocks languishing at their lowest levels since late 2020, when the global economy was still recovering from the COVID-19 pandemic. .

Oil prices rose more than 4% as the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, said they would consider cutting output, while the British pound rallied after the UK government said he would reverse a controversial tax cut that had rocked British markets.

But market sentiment remained fragile on concerns that aggressive interest rate hikes by the US Federal Reserve would increase global recession risks.

European stock markets were in a sea of ​​red, with the STOXX 600 index falling 1.4% (.STOXX). Shares in beleaguered Swiss bank Credit Suisse (CSGN.S) it fell about 10% in early trading, reflecting market concern for the group as it finalizes a restructuring program to be announced on October 27.

Asian stocks fell mainly in light holiday trading, although Japanese markets found support in strong energy and semiconductor stocks. (.N225).

US stock futures were mixed and the MSCI World Stock Index (.MIWD00000PUS) it fell to its lowest level since the end of 2020.

Even the news of the British government’s fiscal U-turn did not seem to lift broader sentiment.

Stephen Innes, managing partner at SPI Asset Management, said last week’s collapse in UK markets, following the September 23 UK “mini budget,” suggested a bear market in equities had entered a new phase.

“The fragility of the market heading into the fourth quarter means it’s time to get comfortable being uncomfortable,” he said.

“Exiting more than a decade of cheap money and liquidity injections has always been difficult. But the Fed has not blinked in the face of falling stock markets, quite the opposite.”

The MSCI index of global 47-country stocks rose 10% between July and mid-August. But the Fed’s aggressive rate hikes soon resurfaced, and that index has plunged 15% since then, leaving it down 25% and $18 trillion so far this year.

The central banks of Australia and New Zealand are meeting this week and are expected to raise rates further.

Oil prices rose on reports that OPEC+ will this week consider cutting output by more than 1 million barrels a day, its biggest cut since the pandemic, in a bid to support the market. Brent crude futures rose more than 4% to nearly $89 a barrel and US West Texas Intermediate crude rose 4.5% to $83 a barrel.

UK BREATH

The battered British pound rose about 0.5% to $1.1200 and government bond yields fell, lifting their price, after the UK policy reversal.

“From a market perspective, it’s a good step in the right direction. It will take time for the markets to accept the message, but it should ease the pressure,” said Jan Von Gerich, chief analyst at Nordea. “Questions remain and the pound is likely to remain under pressure.”

London’s FTSE-100 stock index fell 1% (.FTSE)aligning with other markets.

Meanwhile, the Japanese yen briefly fell as low as 145.4 per dollar, even as Japan’s finance minister Shunichi Suzuki said the government would take “decisive action” to prevent sharp moves in the currency.

It was the first time the yen had fallen through the 145 barrier since Sept. 22, when Japan stepped in to prop up its currency for the first time since 1998.

In general, trade in Asia was subdued. South Korea had a national holiday and China entered its “Golden Week” break on Monday. Hong Kong is closed for a public holiday on Tuesday.

Gold was up just 0.3% at $1,664 an ounce.

Reporting by Dhara Ranasinghe, additional reporting by Sam Byford in TOKYO; Edited by Hugh Lawson

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