- US stock futures down 0.6%
- European stocks are heading for the worst week of 2 months
- The former MSCI Asia index of Japan fell 2.87%
LONDON, May 6 (Reuters) – The US dollar reached 20-year highs and global stocks fell to their lowest level in more than a year on Friday as markets expected more US interest rates to rise, while Asian stocks fell amid concerns for the blow to growth from China’s Zero COVID Policy.
The US currency turned to its fifth consecutive week of profits after the Federal Reserve raised interest rates by 50 basis points this week. The market sets prices with more than a 90% chance of growth of 75 bps in June, according to Refinitiv.
Wage data in the United States, due later Friday, will help traders assess the strength of the US economy. Economists polled by Reuters predict that the data will show that the United States created 391,000 new jobs in April, up from 431,000 a month earlier.
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“The trend is still for a strong and very tight labor market, fueled by rising wages and a problem for long-term inflation,” said Gergeli Mayoros, a member of the investment committee at Carmignac’s asset manager. This makes it difficult for the Fed to maintain stable prices, he added.
“Job creation is still too hot for the Fed to fulfill its mandate.
The dollar reached a 20-year high of 104.06 against the currency index and rose 0.19% to 130.42 yen, also close to its highest level in 20 years.
The euro fell 0.38% to $ 1.0499, close to its last five-year low.
Sterling fell to its lowest level against the dollar in nearly two years after falling 2.2% on Thursday.
The Bank of England raised interest rates by 25 basis points as expected, but two politicians expressed caution about rushing future interest rate hikes. Read more
The MSCI World Capital Index (.MIWD00000PUS) fell 0.52% to its lowest level since February 2021.
US stock futures fell 0.6% after the Dow Jones Industrial Average (.DJI) and S&P 500 (.SPX) fell more than 3% overnight and the Nasdaq Composite (.IXIC) fell 4%. , 99% in its biggest one-day decline since June 2020.
European stocks (.STOXX) fell more than 1% to their lowest level since mid-March, heading for their worst week in two months. The British FTSE (.FTSE) fell 0.8%.
“We are still in an environment where growth is slowing and we are beginning to see evidence that sectors like housing in the US are slowing, global PMIs are showing damage and savings are being spent,” said Grace Peters, EMEA’s chief executive. investment strategy in JPMorgan Private Bank.
“But based on the latest US data, we’re comfortable tracking inflation peaking in the second quarter.”
Yields in the US are rising due to expectations of a rapid rate of interest rate hikes. The yield on 10-year US banknotes was the last 3.063%, after passing 3.1% overnight for the first time since November 2018.
Germany’s 10-year government bond yield rose to 1.057%, the highest level since 2014.
MSCI’s broadest Asia-Pacific stock index outside Japan (.MIAPJ0000PUS) fell 2.87% to its lowest level since March 16, the day Chinese Deputy Prime Minister Liu He increased stocks, pledging to support markets and the economy.
The figure is 4% lower than last Friday’s close, which would be its worst week since mid-March. Japan’s Nikkei (.N225) reversed the trend, rising 0.69% after returning from a three-day vacation.
China’s blue chips (.CSI300) fell 2.53%, the Hong Kong benchmark (.HSI) lost 3.89% and the Chinese yuan fell to an 18-month low in both land and offshore markets. ,
China will fight any comments and actions that distort, question or deny the country’s policy of responding to COVID-19, state television said Thursday after a meeting of the country’s highest decision-making body. Read more
Investors said this seemed to preclude any easing of the zero-COVID-19 policy, which is slowing China’s economic growth and disrupting global supply chains.
“The silver line is the expectation that new Chinese fiscal measures may come out over the weekend,” said Dickie Wong, director of research at Hong Kong-based brokerage Kingston Securities. “This is the only thing that gives Asian markets some support in their current low ratings.”
Oil prices have allayed fears of global economic growth, as supply-side concerns have boosted prices ahead of the European Union’s upcoming embargo on Russian oil.
Brent futures rose 0.29% to $ 111.78 a barrel. US crude rose 0.23% to $ 108.51 a barrel.
Gold fell 0.12% to $ 1874.7 an ounce.
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Report by Carolyn Conn in London and Alan John in Hong Kong; Edited by Andrew Havens
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