Asian Stocks Down, Dollar Stands Alone

As the possibility of rising interest rates and weak growth shook the markets on Monday, Asian stocks were set to begin the final week of the quarter on the decline.

S&P 500 futures were unchanged following a brief dip. Futures predicted drops in Sydney, Hong Kong, and Tokyo. In light morning trading, the dollar hit new highs against the pound, the euro, and the Australian dollar.

After the United States and a dozen other countries hiked interest rates and warned of impending hardship last week, equities and bonds tanked. Japan made a currency market intervention to defend the yen. Investors ceased to have faith in Britain's economic management.

For the second week in a row, the Nasdaq fell more than 5%. The S&P 500 dropped by 4.8%.

Sydney Ray Attrill, head of the currency strategy at National Australia Bank, stated that no one's views had changed after a weekend of thought.  "It's a case of shoot first and asks questions later, as far as UK assets are concerned."

Gilts had their worst selling on Friday in three decades, and the pound hit a low of $1.0765 on Monday as investors fear that proposed tax cuts will put the government's finances at risk. This quarter, the sterling is down 11%.

Last week saw a 94 basis point increase in five-year gilt rates, by far the largest weekly increase seen in Refinitiv data going back to the middle of the 1980s. The two-year yield increased by 35 basis points to 4.2140% last week, and the benchmark 10-year yield increased by 25 basis points to 3.6970%.

As the likelihood of a war in Ukraine increased, the euro shook to a two-decade low of $0.9660 before stabilizing at $0.9686.

A right-wing coalition led by Giorgia Meloni's Brothers of Italy party was projected to win a comfortable majority in the upcoming Italian parliamentary elections. Some found solace in The League's mediocre performance as euroskeptics.