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Eurozone gripped by recession panic as world biggest hedge fund makes £5.9bn bet | World | News

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Bridgewater Associates has placed at least $6.7billion (£5.9billion) in bets against European stocks, according to data group Breakout Point, in a sign that the hedge fund firm may be pessimistic about companies on the continent.

Using Bridgewater’s public disclosures, Breakout Point calculated that the Connecticut-based fund has bet against 21 European companies so far this week, in sectors ranging from finance to energy.

Among its biggest short bets are semiconductor-equipment supplier ASML Holding NV (ASML.AS) ($1billion), energy company TotalEnergies SE (TTEF.PA) ($705 million) and drugmaker Sanofi SA (SASY.PA) ($646million).

Banco Santander SA (SAN.MC), BNP Paribas SA (BNPP.PA) and Banco Bilbao Vizcaya Argentaria SA (BBVA.MC) and Intesa Sanpaolo SpA (ISP.MI) are also in the list of Bridgewater’s short positions, as well as insurance companies Allianz SE (ALVG.DE), ING Groep NV (INGA.AS) and AXA SA (AXAF.PA), according to Bridgewater.

“When it comes to magnitude of short-selling, we don’t recall any other money manager coming close to this, except for Bridgewater itself,” said Breakout Point, adding that the hedge fund founded by billionaire Ray Dalio had similar bets back in first quarter of 2018 and 2020.

Breakout Point used public disclosures to make calculations about Bridgewater short positions.

Under European regulation, funds have to disclose bets over 0.5 percent short interest, which means Bridgewater’s bets against European stocks could be bigger.

It is not clear, however, if those positions are a hedge against other bets.

Bridgewater, which manages $150 billion in assets, did not immediately comment on the matter.

Bridgewater’s bets become public in a week when central banks across Europe and in the United States raised interest rates to fight inflation, in a move that could tip economies into recession.

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World stocks headed for their worst week since markets’ pandemic meltdown in March 2020 as leading central banks doubled down on tighter policy in an effort to tame inflation, setting investors on edge about future economic growth.

The biggest US rate rise since 1994, the first such Swiss move in 15 years, a fifth rise in British rates since December and a move by the European Central Bank to bolster the indebted south ahead of future rises all took turns in roiling markets.

The Bank of Japan was the only outlier in a week where money prices rose around the world, sticking with its strategy of pinning 10-year yields near zero on Friday.

After a week of punchy moves across asset classes, world stocks were flat on Friday to take weekly losses to 5.5 percent and leave the index on course for the steepest weekly percentage drop in more than two years.

Overnight in Asia, the dollar climbed 1.9 percent against the yen to 134.70 in volatile trade, while MSCI’s broadest index of Asia-Pacific shares outside Japan fell to a five-week low, dragged by selling in Australia.

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Japan’s Nikkei fell 1.8 percent and headed for a weekly drop of almost 7 percent.

S&P 500 futures were up 0.8 percent and Nasdaq 100 futures up 1.2 percent, although both remain well underwater on the week.

Southern European bond yields dropped sharply on Friday, though, after reports of more detail from ECB President Christine Lagarde over its plans to develop a tool to support yields.

Germany’s 10-year yield, the benchmark for the euro area, was last at 1.66 percent.

In recent sessions, the dollar pulled back from a 20-year high, but it has not fallen far and was last up 0.5 percent, on course to end the week steady against a basket of currencies.

Sterling rose 1.4 percent on Thursday after a 25-basis-point rate rise and was last down 0.5 percent as it heads for a steady week. Two-year gilts were last at 2.091 percent.

“Despite today’s apparent semblance of calm in the markets, investors will need to transition from a soft to a hard landing strategy meaning they will either have to turn to defensive or de-risk completely,” Stephen Innes, managing partner at SPI Asset Management, said.

Growth fears took oil on a brief trip lower before prices steadied. Brent crude futures were last at $120.40 a barrel.

Gold extended intraday losses to trade down 0.6 percent at $1,848 an ounce while bitcoin climbed 2.8 percent to $20,943.

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