Fourth quarter off to a shaky start as stocks stumble, but oil jumps

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 British government said it would reverse a controversial tax cut that had rocked UK markets.

However, market sentiment remained fragile on concerns that aggressive interest rate hikes by the US Federal Reserve and others are increasing global recession risks.

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European equity markets were a sea of red, with the STOXX 600 index down 0.4%, retracing earlier losses of 1.4% (.STOXX). Shares in beleaguered Swiss bank Credit Suisse (CSGN.S) dropped about 10% in early trading, reflecting the market’s concern for the group as it finalizes a restructuring program to be announced on October 1. 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.

News of the British government’s fiscal U-turn didn’t appear to lift sentiment but is likely to help ease market concerns about fiscal overshoot, said Kallum Pickering, senior economist at Berenberg Bank in London.

“Markets appear to have lowered their expectations for the BoE bank rate, while gilt yields have fallen further from their recent highs. Easier financial conditions may ease the short-term impact on economic performance,” he said. Pickering.

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 fell 15% fromleaving it down 25% and $18 billion 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 consider production of more than 1 million barrels per day this week, its biggest reduction 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 was up about 0.4% at $1.12085 and government bond yields fell, sending its price higher, following 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 0.5% (.FTSE)falling in line with other markets.

Meanwhile, Japan’s yen briefly fell as low as 145.4 to the dollar even as Japan’s finance minister Shunichi Suzuki said the government would take “decisive steps” to avoid sharp currency movements.

It was the first time the yen had fallen through the 145 barrier since September 1. On January 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 0.4% at $1,665.79 an ounce.