Everything but the greenback is selling off right now: Stocks, bonds, commodities and currencies around the world came under pressure yesterday as tightening financial conditions and the relentless rise of the USD raise fears of recession and destabilize currencies in markets both developed and emerging.

A snapshot:

• USD soars: The USD hit heights not seen since May 2002 yesterday as the currency continued a surge that has seen it gain around 5% in the past week alone.
• US stocks sink: The S&P 500 fell to its lowest level since December 2020 after losing more than 1% yesterday, while the Dow tumbled 1.1% to enter a bear market. The S&P is down almost 8% this month and 23.3% YTD.
• As did global stocks: The MSCI All World Index fell 2% and is now at its lowest level since November 2020.
• Commodities crumble: Energy and precious metals fell yesterday, with Brent falling 2.6% to its lowest level since 11 January and gold declining 1.3% to lows not seen since April 2020.
• The first bear market for global bonds in 76 years: That’s according to Deutsche Bank research published on a day when the sell-off in US, European and UK bonds continued unabated.

To say that UK assets are being hammered is an understatement: The GBP flash-crashed more than 4% to hit a record low against the USD in the early hours of trading yesterday while UK bond prices collapsed, with yields on five-years surging more than 100 bps in just two trading sessions. The market was reacting to a new program of tax cuts by the new Truss administration, which UBS Global Wealth Management’s chief economist likened to a “doomsday cult.”

Over in Asia, China moved to defend its currency from the USD by making it more expensive for investors to speculate against the CNY. The currency has lost 3.7% against the USD this month alone. This comes a few days after the Bank of Japan intervened to support the JPY — down 24% against the USD this year — for the first time in 24 years. Analysts are now warning of an Asian financial crisis if the USD continues to appreciate against the Chinese and Japanese currencies.

Falling oil prices have helped push Saudi stocks into a bear market: The benchmark Saudi index closed 2.3% in the red yesterday, leaving it down more than 21% from its recent peak in May.

One risk asset that remained unscathed (and it’s not often we say this): BTC, which held steady above USD 19k and was up almost 2% on the day.

Central banks have no intention of easing the speed of rate hikes: Federal Reserve officials have doubled down on aggressive rate hikes, ECB President Christine Lagarde yesterday vowed to raise rates for the next “several meetings,” while the market expects the Bank of England to hike by 100 bps, possibly in an emergency meeting, in response to the current turmoil.

ALSO WORTH NOTING: Porsche IPO covered multiple times: Porsche is set to price its shares at the higher end of the EUR 76.50-82.50 range, after it saw major demand for its 911 mn share sale — representing 12.5% of the company, according to the Financial Times. The company is expected to raise some EUR 9.4 bn from the sale, valuing the car maker at as much as EUR 75.2 bn and making it Germany’s second-largest IPO and Europe’s third-biggest ever. The company is set to make its market debut on Thursday.

THE CLOSING BELL-

The EGX30 fell 0.7% at yesterday’s close on turnover of EGP 948.50 mn (0.3% below the 90-day average). Local investors were net buyers. The index is down 17.8% YTD.

In the green: Egypt Kuwait Holding-EGP (+4.2%), Ezz Steel (+2.8%) and Sidi Kerir Petrochemicals (+2.1%).

In the red: Eastern Company (-3.2%), e-Finance (-2.1%) and CIB (-2.0%).

It’s a mixed picture in Asia this morning: Shares in China, Hong Kong and South Korea are in the red while the Nikkei and the ASX are marginally in the green. European and US markets could see early gains at the opening bell later today.