Stocks pull back as traders see higher rates; Turkish lira plunges

  • Wall Street, European stock indices down
  • Dollar retreats from 16-month high
  • Turkish lira drops 15% to record low

WASHINGTON / LONDON, Nov. 23 (Reuters) – Wall Street shares fell and the dollar fell from a 16-month high on Tuesday as investors positioned for interest rate hikes in 2022 after the appointment Federal Reserve Chairman Jerome Powell for a second term.

European stocks fell to a three-week low in their biggest daily loss in nearly two months as coronavirus fears weighed in.

The Turkish lira plunged 15%, crashing to a new all-time low in its second worst day in history, as investors panicked after President Tayyip Erdogan defended recent rate cuts and s is shown little concern about rising inflation. Read more

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Volatility of the read

Yields on Treasuries weighed on major US tech stocks, putting pressure on the tech-heavy Nasdaq. Bank stocks extended yesterday’s gains, limiting losses elsewhere.

The Dow Jones Industrial Average (.DJI) rose 0.34% to 35,741.24, the S&P 500 (.SPX) lost 0.25% to 4,671.15 and the Nasdaq Composite (.IXIC) fell 1.28% at 15,652.17 at 2:11 p.m. EST (1911 GMT). )

“It is possible that interest rates will be increased sooner than expected,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

“But this result, while positive for bank stocks, is not for the rest of the stock market, especially technology, which is trading at very high price / earnings multiples.”

The pan-European STOXX 600 (.STOXX) lost 1.3%, with only the oil and gas (.SXEP) and basic resources (.SXPP) sectors trading higher. Energy stocks were boosted by rising oil prices after a US decision to dip into emergency reserves.

The German DAX (.GDAXI) fell more than 1%, while the UK FTSE 100 (.FTSE) rose 0.15%.

US President Joe Biden on Monday asked Powell to continue as Fed chairman and Lael Brainard, the other leading candidate for the post, for vice-president. The news initially supported Wall Street stocks, before the market retreated in the afternoon with the S&P 500 and Nasdaq Composite closing well above all-time highs.

The feeling that a second term under Powell could reinforce the desire of policymakers to curb rising inflation has also prompted investors to buy dollars. Read more

The dollar index (.DXY), which tracks the greenback against a basket of six currencies, was down 0.04%. The euro rose 0.13%, recovering slightly from a July 2020 low set earlier in the session.

U.S. Treasury yields were higher in choppy trading as investors braced for the Fed to become more aggressive in the fight against inflation, although two-year bond yields fell after reaching their highest. high level since early March 2020 Monday.

“Interest rate hike expectations have increased, with the market now forecasting almost three hikes through 2022,” said Steen Jakobsen, chief investment officer at Saxo Bank.

Market expectations for a first rate hike from the European Central Bank have been brought forward to December 2022. read more

COVID CONCERNS

New concerns about the spread of COVID-19 have added to the gloom. Riskier assets have been rocked in recent sessions by increasing cases of COVID-19 in Europe and new restrictions, watering investors’ hopes for a rapid recovery in consumption and growth around the world .

Outgoing German Chancellor Angela Merkel said the latest wave was the worst the country has seen so far, as Austria entered a new lockdown on Monday.

Eurozone purchasing managers’ index figures for November showed an unexpected acceleration in business growth, but it failed to lift morale. Read more

The Euro STOXX 50 volatility index (.V2TX), the main indicator of stock market anxiety in Europe, reached its highest level in nearly seven weeks.

Spot gold hit a nearly three-week low, also under pressure from rate hike bets.

Oil prices surged after a move by the United States and other consuming countries to release tens of millions of barrels of reserves to cool the market fell short of expectations. Read more

Analysts said the effect on prices would likely be short-lived after years of declining investment and a strong global recovery from the COVID-19 pandemic.

Brent crude rose 3.44% to $ 82.44 a barrel. US crude rose 2.64% to $ 76.78 per barrel.

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Additional reports by Ambar Warrick and Devik Jain; Editing by Dan Grebler and Alison Williams

Our Standards: Thomson Reuters Trust Principles.

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