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GLOBAL MARKETS – Stocks forecast 3% weekly loss, dollar soars ahead of US jobs data

Global stocks were heading for a 3% loss on the week as the dollar hit 24-year highs against the yen for a second day on Friday ahead of key US jobs data, as investors prepare for aggressive rate hikes from the Federal Reserve.

Further lockdowns in China are also fueling concerns about global growth, while high energy costs due to the war in Ukraine weigh on European markets. “The market is focused on how aggressive the Fed is with its hike cycle,” said Giles Coghlan, chief currency analyst at HYCM, noting that higher rate expectations have solidified since a speech last week. last week by Fed Chairman Jerome. Powell at the Jackson Hole Central Banking Conference.

Markets are worried about “China’s slowdown, Eurozone recession and a hawkish Fed,” he added. The MSCI World Equity Index stabilized above 6-week lows set in the previous session, but was heading for its third consecutive week of losses.

US S&P futures were flat after the S&P 500 index rose 0.3% on Thursday. US August nonfarm payrolls figures, due at 12.30pm GMT on Friday, are expected to show 300,000 jobs were added last month, while unemployment hovered at 3.5%.

Strong data bolsters the Fed’s ability to raise rates to curb inflation without dampening growth. Futures markets have priced up to a 75% chance that the Fed will hike 75 basis points at its September policy meeting, up from a 69% chance a day ago.

European stocks also fell from Thursday’s 6-week lows, gaining 0.5%, while Britain’s FTSE rose 0.4%. In Europe, fears of a recession are growing, with a survey on Thursday showing that manufacturing activity in the eurozone shrank again last month as consumers felt the pinch of a cost of living crisis that slashed their expenses.

The US dollar hit 24-year highs against the weakly yielding yen before paring gains to stabilize at 140.28. The dollar index, which measures its performance against a basket of six currencies, fell 0.24% after hitting a 20-year high in the previous session.

The euro rose 0.4% to $0.9985. In bond markets, the benchmark two-year bond yield edged down 2 basis points to 3.5006%, while the 10-year bond yield fell 1 bp to 3.2537%.

German 10-year bond yields rose 1.5 basis points to 1.579%. MSCI’s broadest Asia Pacific ex-Japan equity index fell 0.5%, heading for its worst weekly performance since mid-June with a 3.6% drop, as rising expectations for Aggressive global rate hikes hit risky assets.

Japan’s Nikkei fell 0.1%, China’s blue chips 0.5%, Hong Kong’s Hang Seng index 0.9% and South Korea 0.3%. The southwestern Chinese metropolis of Chengdu announced a lockdown of its 21.2 million people on Thursday, while the tech hub of Shenzhen also rolled out new social distancing rules as more Chinese cities attempted to fight against the recurrent epidemics of COVID-19.

Nomura analysts said what is becoming increasingly concerning is that COVID-19 hotspots in China are shifting from remote regions and cities to provinces that matter far more to China’s national economy. . “We maintain the view that China will maintain its zero-COVID policy until March 2023, when the (leadership) reshuffle is fully completed, but we now expect a slower pace of zero policy easing. -COVID after March 2023,” Nomura said. .

Oil prices fell 3% overnight before recovering ground on Friday, but were on track to post steep weekly losses on fears that COVID-19 is dampening China and weak global growth. does not affect the request. Brent crude futures rose 2% to $94.15 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 1.75% to $88.34 a barrel. barrel.

Spot gold rose 0.35% to $1,701 an ounce.

(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)