US stocks were mixed, oil prices were choppy, and the dollar and Treasury yields rose on Monday, with Wall Street digesting a raft of macroeconomic news.
The moves came after sterling slumped to a record low earlier in the day, before recovering, and a renewed selloff in British gilts pushed euro zone bond yields higher as the reaction to last week’s fiscal statement in the United Kingdom again roiled markets.
US stocks were mixed to start the week – the Dow Jones Industrial Average dipped about 0.5 percent and the S&P 500 fell nearly 0.3 percent, while the Nasdaq Composite gained 0.4 percent.
Global equities were also mixed after initially sliding on concerns about high-interest rates continued to put pressure on the financial system. Europe’s STOXX 600 index at first slipped to hit a new low in December 2020 but then swung back for a slight 0.1 percent gain on the day. Asian stocks fell 1.45 percent.
The pound skidded to an all-time low against the dollar, the last trading down about 0.4 percent, as investors waited to see if the Bank of England will intervene to calm concerns over government plans that could stretch the country’s finances.
Sterling’s declines are partly due to dollar strength. The dollar index, which tracks the greenback against six peers, hit a new 20-year top of 114.58 in early trade. It was last at $113.5, up about 0.36 percent.
The tumble is leading to speculation the Bank of England will have to hold an emergency meeting to raise rates.
“The Bank of England is in a very difficult spot where if they don’t react, they risk another sterling collapse and things getting very messy,” said Mike Riddell, senior portfolio manager, Allianz Global Investors. “If they do react, a developed market hiking rate to defend the currency looks like an emerging market. So they’re damned if they do, damned if they don’t.”