Q4 start shaky as stocks stumble, but oil jumps

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

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

But market sentiment remained fragile amid fears that aggressive interest rate hikes by the US Federal Reserve would increase the risks of a global recession.

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European stock markets were in the red, with the STOXX 600 index down 1.4% (.STOXX). Shares in beleaguered Swiss bank Credit Suisse (CSGN.S) fell around 10% in early trading, reflecting market concern over the group as it finalizes a restructuring program due to be announced on May 27. october.

Asian stocks mostly fell in lessened trade over the holidays, although Japanese markets found support in strong energy and semiconductor stocks (.N225).

US equity futures were mixed and the MSCI Global Equity Index (.MIWD00000PUS) fell to its lowest level since late 2020.

Even news of the UK government’s tax reversal didn’t seem to stir wider sentiment.

Stephen Innes, managing partner at SPI Asset Management, said last week’s slump in UK markets, following Britain’s ‘mini-budget’ on September 23, 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 feel bad,” he said.

“Coming out of more than a decade of cheap money and liquidity injections has always been tricky. But the Fed hasn’t flinched in the face of falling stock markets, quite the contrary.”

The MSCI index of global equities of 47 countries rose 10% between July and mid-August. But the Fed’s aggressive rate hikes quickly returned, and this index has plunged 15% since, 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 make further rate hikes.

Oil prices have rallied following reports that OPEC+ will this week consider cutting production by more than a million barrels a day, for 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 U.S. West Texas Intermediate crude rose 4.5% to $83 a barrel.

RESPITE IN THE UK

Britain’s battered pound rose about 0.5% to $1.1200 and yields on its government bonds fell, pushing their price higher, following the reversal in British policy.

“From a market perspective, this is a good step in the right direction. It will take time for 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), in line with other markets.

Meanwhile, the Japanese yen briefly fell to 145.4 to the dollar, even as Japanese Finance Minister Shunichi Suzuki said the government would take “decisive action” to prevent sudden currency movements.

It was the first time the yen broke the 145 barrier since September 22, when Japan stepped in to support its currency for the first time since 1998.

Trade through Asia was generally moderate. South Korea had a public holiday and China entered its “Golden Week” on Monday. Hong Kong is closed for a public holiday on Tuesday.

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

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

Our standards: The Thomson Reuters Trust Principles.

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