Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn
Graphic: World FX rates http://tmsnrt.rs/2egbfVh
LONDON, Oct 3 (Reuters) - The final quarter of the year
got off to a shaky start on Monday, with world stocks
languishing at their lowest levels since late 2020 - when the
global economy was still reeling from the COVID-19 pandemic.
Oil prices jumped more than 4% as the Organization of the
Petroleum Exporting Countries and its allies, a group known as
OPEC+, said it would consider reducing output, while sterling
rallied after the British government said it would reverse a
controversial tax cut that had rocked UK markets.
But sentiment across markets remained frail given worries
that aggressive interest rate hikes from the U.S. Federal
Reserve and others raise global recession risks.
European equity markets were a sea of red, with the STOXX
600 index down 0.4%, pulling back from earlier losses of 1.4%
. Shares in beleaguered Swiss bank Credit Suisse
fell around 10% in early trading, reflecting market
concern about the group as it finalises a restructuring
programme due to be announced on Oct. 27.
Asian stocks mostly fell in holiday-thinned trade although
Japanese markets found support on strong energy and
U.S. stock futures were mixed and MSCI's world equity index
fell to its lowest level since late 2020.
News of the British government's tax U-turn didn't appear to
lift broader sentiment but probably helps to calm market worries
about fiscal excess, said Kallum Pickering, senior economist at
Berenberg Bank in London.
"Markets seem to have lowered their expectations for the BoE
bank rate while gilt yields have fallen further from their
recent highs. Less tight financial conditions may ease the
near-term shock on economic performance," said Pickering.
MSCI's 47-country world stocks index rallied 10% between
July and mid-August. But aggressive Fed rate hikes soon came
swinging back in, and that index has plunged 15% since, leaving
it down 25% and $18 trillion so far this year.
Central banks in Australia and New Zealand meet this week
and are expected to deliver further rate increases.
Oil prices rallied on reports what OPEC+ will this week
consider cutting output by more than 1 million barrels a day,
for its biggest reduction since the pandemic, in a bid to
support the market. Brent crude futures rose more than
4% to almost $89 a barrel and U.S. West Texas Intermediate
crude was up 4.5%, at $83 a barrel.
Britain's battered pound was up around 0.4% at
$1.12085 and its government bond yields fell, pushing their
price up, following the UK policy reversal
"From a market perspective, it is a good step in the right
direction. It will take time for markets to buy the message but
it should ease the pressure," said Jan Von Gerich, chief analyst
at Nordea. "Questions still remain and sterling will likely
remain under pressure."
London's FTSE-100 stock index was down 0.5%, falling
in line with other markets.
Japan's yen meanwhile briefly fell as low as 145.4
to the dollar even as Japan's finance minister, Shunichi Suzuki,
said that the government would take "decisive steps" to prevent
sharp currency moves.
It was the first time the yen has fallen through the 145
barrier since Sept. 22, when Japan intervened to prop up its
currency for the first time since 1998.
Trade across Asia was generally subdued. South Korea had a
national holiday and China entered its "Golden Week" break on
Monday. Hong Kong is closed for a public holiday on Tuesday.
Gold was just 0.4% firmer to $1,665.79 an ounce.
(Reporting by Dhara Ranasinghe, additional reporting by Sam
Byford in TOKYO; Editing by Hugh Lawson and David Evans)