(Bloomberg) -- Stocks and bonds extended their selloff on Thursday as a hawkish drumbeat from central banks and a lockdown in China further frayed investor nerves. The dollar jumped.
A global equity index hit a six-week low as Nasdaq 100 futures slid more than 1%, partly on a tumble in chipmaker Nvidia Corp. over a sales warning. European and Asian shares were also dragged down by the tech sector.
The market jitters come after August’s losses, reflecting fears of an economic downturn alongside restrictive monetary policy to choke inflation. A global bond rout saw the two-year Treasury yield touch 3.50% for the first time since 2007.
Oil was on the back foot as aggressive tightening and China’s slowdown dim the demand outlook. Gold fell and silver slid to the lowest in two years. Commodity-linked and Group-of-10 currencies weakened, while the yen fell to a fresh 24-year low.
Stocks are entering a month that is often poor for returns after an August of losses across asset classes. An equity bounce from June lows is fizzling as the Federal Reserve pushes back against bets on tempered rate hikes. Global bonds, meanwhile, are near their first bear market in a generation.
The market is getting the message that the Fed is going to fight inflation at all costs, Frances Stacy, director of strategy at Optimal Capital Advisors, said on Bloomberg Radio, adding “I don’t think we’ve seen the bottom for this year.”
Cleveland Fed President Loretta Mester reiterated the central bank needs to raise its benchmark rate above 4% by early next year. She said she doesn’t anticipate rate cuts in 2023.
China moved to lock down Chengdu, a city of 21 million residents, from Thursday night to tackle Covid. It’s the biggest Chinese city to face such curbs since Shanghai’s bruising two-month crisis earlier this year.
The latest economic data also underlined a parlous outlook for China. A private survey suggested factory activity contracted in August, sapped by power shortages and Covid-linked curbs.
Here are some key events to watch this week:
- ECB Governing Council members due to speak at event Tuesday through Sept. 2
- US nonfarm payrolls, Friday
- UK leadership ballot closes Friday. Winner announced Sept. 5
Will Chinese sovereign bonds outperform Treasuries? China is the theme of this week’s MLIV Pulse survey. Click here to participate anonymously.
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 fell 0.3% as of 8 a.m. London time
- Futures on the S&P 500 fell 0.6%
- Futures on the Nasdaq 100 fell 1.1%
- Futures on the Dow Jones Industrial Average fell 0.4%
- The MSCI Asia Pacific Index rose 0.2%
- The MSCI Emerging Markets Index rose 0.1%
Currencies
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro fell 0.3% to $1.0019
- The Japanese yen fell 0.3% to 139.39 per dollar
- The offshore yuan was little changed at 6.9103 per dollar
- The British pound fell 0.3% to $1.1589
Bonds
- The yield on 10-year Treasuries was little changed at 3.20%
- Germany’s 10-year yield advanced five basis points to 1.59%
- Britain’s 10-year yield advanced six basis points to 2.86%
Commodities
- Brent crude fell 0.6% to $95.03 a barrel
- Spot gold fell 0.3% to $1,706.72 an ounce