Image: Reuters Berita 24 English - On Wednesday, there was a tentative return to calm on the world's financial markets, with the euro s...
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| Image: Reuters |
The euro traded at $1.025, only a little bit above the overnight low it reached since late 2002 as concerns about a downturn and rising commodities costs weighed.
Along with advances in European equities and government bond yields throughout the eurozone, Brent crude increased by about 3% after falling by 9.5 percent on Tuesday to its lowest level in 2-1/2 months.
The broad Euro STOXX 600 increased by 1.9 percent, with gains of 1.7 and 1.9 percent in Frankfurt and Paris, respectively. Leading the gains were equities in retail and travel and leisure.
Investors claimed that despite this, market-wide concerns about growth persisted.
Hugh Gimber, global market strategist at J.P. Morgan Asset Management, described the recent market movements as "typical recessionary pricing." "Investors are truly understanding the risks better now,"
The Japanese yen was one of the most popular safe haven currencies, while the dollar index was just slightly below its overnight 20-year peak at 106.57.
The 50-country MSCI world equity index, which measures stocks, increased by 0.1 percent. S&P 500 futures indicated that Wall Street would advance by around 0.3 percent.
Prior to this, Taiwan's benchmark index had a 2 percent decline, leading a 1 percent decline in MSCI's index of Asia-Pacific equities outside of Japan.
As Prime Minister Boris Johnson clung to power, wounded by the resignation of ministries and with an increasing number of legislators asking for him to leave, the British pound traded close to a two-year high versus the dollar.
Sterling was trading at $1.1912 against the dollar, down 0.1 percent from the previous day's low of $1.1899, its lowest level since March 2020.
Even as concerns about a possible global recession persist, Brent crude futures increased by over 3% to $105.85 per barrel.
The new round of growth concerns has been mostly driven by uncertainty over Europe's gas supply, which has driven up costs. Benchmark Since mid-June, gas prices in the Netherlands have doubled.
But the Norwegian government stepped in on Tuesday to break a walkout in the oil industry that had reduced oil and gas output, breaking a deadlock that would have made Europe's energy supply crisis worse.
Some investors are concerned that the Nord Stream pipeline, which transports gas from Russia to Germany, may not reopen during a ten-day maintenance outage starting on July 11, leading to supply shortages in the winter that will result in rationing and a dramatic decline in economic activity.
Interest rates are rising in the background.
Later on Wednesday, the Federal Reserve will release the meeting minutes from June, when it announced the biggest increase in the benchmark interest rate in almost 30 years. Since Fed officials have stated that controlling inflation is their top priority, even at the expense of growth, it is likely to portend further increases.
At a meeting for investors in Singapore, August Hatecke, co-head of UBS Wealth Management Asia Pacific, stated that "the likelihood of a soft landing had significantly decreased."
