Stock markets fall and global bond yields rise on fears of rising rates

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Stocks fell and global bond yields rose on Friday as expectations of aggressive monetary policy tightening from the Federal Reserve and its peers ended the week on a weak note.

A FTSE gauge of global stocks slipped 0.8%, with Europe’s regional Stoxx 600 down 1.8% and Hong Kong’s Hang Seng down 0.4%. Futures that track Wall Street’s S&P 500 fell 0.7% before the New York opening bell, while those that track the tech-heavy Nasdaq 100 fell 1.1% .

The moves came as Snap shares fell nearly 30% in premarket trading on Friday, after the camera and messaging apps group revealed late Thursday that revenue growth had slowed and losses had exploded in the third quarter. Advertisers were continuing to cut marketing budgets due to macroeconomic headwinds, he said.

Shares of tech heavyweights Alphabet and Meta were also down 1.5% and 3% respectively before the bell.

Adidas was one of Europe’s biggest losers, with the sportswear group’s German-listed shares falling more than 10% after it sounded the alarm bells over profits for the second time in three months .

Shares of rival Puma also fell nearly 9%, while JD Sports Fashion fell 5%.

Investors have been watching corporate financials in recent days for signs of stress from high inflation, rising borrowing costs and tough economic conditions.

The Federal Reserve has led the charge on monetary policy tightening this year, raising interest rates by 0.75 percentage points at each of its last three meetings in an effort to rein in inflation. The US central bank’s target range is now between 3% and 3.25%, and markets are pricing in a fourth straight three-quarter point hike.

In turn, equity and debt markets have come under severe pressure this year, with the S&P having fallen more than 20% since early January. Wall Street’s benchmark index closed its longest streak of quarterly losses since the 2008 financial crisis last month.

Government bonds were hit by a fresh wave of selling on Friday, with the yield on the 10-year Treasury rising 0.09 percentage points to 4.32%, its highest level since 2007. Bond yields rise as their prices fall.

The equivalent UK bond yield climbed 0.17 percentage points to 4.07% as markets grappled with uncertainty surrounding government borrowing plans following the departure of Prime Minister Liz Truss.

New data on Friday also showed UK retail sales fell more than expected in September, heightening concerns that the country was heading into a recession.

The amount of goods bought in Britain fell 1.4% between August and September, after a sharp contraction the previous month, according to data from the Office for National Statistics. Economists polled by Reuters had expected a contraction of 0.5%.

The sell-off also spread to Germany, where the benchmark 10-year Bund yield jumped 0.06 percentage point to 2.47%, its highest level since August 2011.

In currencies, the dollar added 0.1% against a basket of peers, while the pound slipped 0.6% to $1.116. The Japanese yen fell to ¥151.94 against the dollar on Friday after breaking through ¥150 in the previous session for the first time since 1990.

Additional reporting by Hudson Lockett in Hong Kong

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