Global equities face their worst week since March as markets plummet:

 Global equities face their worst week since March as markets plummet:

Global equities headed for their biggest weekly decline in more than three months after a series of central bank rate hikes that pushed bond yields higher and heightened fears of a recession.

Asia's biggest losses came in Hong Kong, where traders rallied after a holiday on Thursday. Friday's decline extended the losing streak to four straight days amid fears that even if China extends more aid to the economy, it won't have much of an impact on markets.

 

"They probably can't ignite the spirits to the extent that stimulus would make them high growth multiples," said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore, on Bloomberg Television. He expects Beijing to try to cushion the economy and keep growth just above 5% as investors worry about regulatory uncertainty, real estate problems, and geopolitical tensions. Stock exchanges on the mainland remained closed on Friday.

Two-year Treasury yields hovered at 4.78% and near their highest level since March after Federal Reserve Chair Jerome Powell said the US might need another rate hike or two in 2023.

Rate hikes by policymakers in England, Norway, and Switzerland underscored the upward pressure on bond yields. Australian and New Zealand 10-year bond yields rose on Friday. The interest rate of the Japanese 10-year benchmark remained stable.

 

US stock futures eased slightly, bringing little relief from Treasury Secretary Janet Yellen's view that the risk of a US recession is receding. She suggested that a drop in consumer spending could be the price to pay for completing the campaign to curb inflation.

 

There are signs that the S&P 500's conviction is low this year as the index looks set to end its longest weekly winning streak since 2021. The latest Bank of America Corp. survey shows that a net 25% of global money managers are still underweight US equities, despite a recent improvement in allocation.

Signs of risk aversion were also seen in the currency markets, with the gauge of dollar strength rising 0.2% as commodity currencies such as the Australian dollar and Norwegian krone fell.

The yen has fluctuated to around 143 against the dollar following its recent depreciation, fueling speculation that Tokyo authorities could resort to verbal intervention. Stronger-than-expected inflation also fueled speculation that the Bank of Japan might adjust its price forecasts or adjust its ultra-loose monetary policy.

In commodities, oil contributed to a fall of more than 4% on Thursday as concerns over high-interest rates unsettled investors and overshadowed a fall in US crude inventories. Gold faced its biggest weekly decline since early February.