Chinese Business

Stocks slid and the dollar surged Friday after US jobs data showed only a timid slowdown in the labor market, setting the stage for further aggressive interest rate hikes. 

Equity markets have taken a battering in the past couple of months, as the US Federal Reserve has made it clear it intends to continue to aggressively raise interest rates until soaring inflation is tamed, even if that means sending the economy into a recession.

There was a brief rebound at the start of the week, when investors hoped data pointing to an economic slowdown would allow the Fed to “pivot,” or slow down rate hikes.

However, the jobs report shows the US labor market is still robust, with hiring in the US economy slowing only slightly in September, to a net gain of 263,000 jobs, from 315,000 in August. 

That was more than the consensus forecast for a net gain of 250,000, sending equities lower and the dollar higher. 

“Those hoping for a Fed pivot have been sorely disappointed with today’s job numbers, which have confirmed that (the) US economy continues to rumble along quite well,” said Chris Beauchamp, chief market analyst at online trading platform IG.

“The latest bear market bounce has now begun to wilt as investors wearily return to expectations” of further Fed rate hikes.

Futures markets show investors saw the report as boosting the odds that the Fed will again undertake a 0.75 percentage point interest rate increase in November.

Major US indices were in the red the entire day, with the broad-based S&P 500 finishing 2.8 percent lower.

In Europe, Frankfurt fell 1.6 percent, and Paris shed 1.2 percent. London ended the day 0.1 percent lower. 

“Investors are simultaneously fretting that the fall in the pace of hirings indicates a slowing economy, but also that the better-than-expected data shows that the jobs markets hasn’t slowed enough to stop the Fed from hiking rates aggressively,” said markets analyst Susannah Streeter at Hargreaves Lansdown brokerage.  

The next data point that the Fed, and investors, will be scrutinizing is the consumer price index report next week.

Elsewhere, oil prices jumped and were set for their biggest weekly gain since March after OPEC and other major producers led by Russia agreed to slash daily output by two million barrels.

– Key figures around 2030 GMT –

New York – Dow: DOWN 2.1 percent at 29,296.79 (close)

New York – S&P 500: DOWN 2.8 percent at 3,639.66 (close)

New York – Nasdaq: DOWN 3.8 percent at 10,652.40 (close)

London – FTSE 100: DOWN 0.1 percent at 6,991.09 (close)

Frankfurt – DAX: DOWN 1.6 percent at 12,273.00 (close)

Paris – CAC 40: DOWN 1.2 percent at 5,866.94 (close)

EURO STOXX 50: DOWN 1.7 percent at 3,375.46 (close)

Tokyo – Nikkei 225: DOWN 0.7 percent at 27,116.11 (close)

Hong Kong – Hang Seng Index: DOWN 1.5 percent at 17,740.05 (close)

Shanghai – Composite: Closed for a holiday

Pound/dollar: DOWN at $1.1082 from $1.1162 on Thursday

Euro/dollar: DOWN at $0.9743 from $0.9791

Euro/pound: UP at 87.987 pence from 87.71 pence

Dollar/yen: UP at 145.38 yen from 145.14 yen

Brent North Sea crude: UP 3.5 percent at $97.92 per barrel

West Texas Intermediate: UP 4.7 percent at $92.64 per barrel

burs-jmb/to

Stocks slid and the dollar surged Friday after US jobs data showed only a timid slowdown in the labour market, setting the stage for further aggressive interest rate hikes. 

Equity markets have taken a battering in the past couple of months as the US Federal Reserve has made it clear it intends to continue aggressively raising interest rates until soaring inflation is tamed, even if that means sending the economy into a recession.

There was a brief rebound at the start of the week as investors hoped data pointing to an economic slowdown would allow the Fed to “pivot”, or slow down rate hikes.

However, the jobs report shows the US labour market is still robust, with hiring in the US economy slowing slightly in September, to a net gain of 263,000 jobs, from 315,000 in August. 

That was more than the consensus forecast for a net gain of 250,000, sending equities lower and the dollar higher. 

“Those hoping for a Fed pivot have been sorely disappointed with today’s job numbers, which have confirmed that US economy continues to rumble along quite well,” said Chris Beauchamp, chief market analyst at online trading platform IG.

“The latest bear market bounce has now begun to wilt as investors wearily return to expectations” of a couple more considerable rate hikes this year, followed by more in 2023. 

Wall Street was sharply lower in late morning trading, with the Dow sliding 1.5 percent. The broader S&P 500 index fell 2.0 percent and the tech-heavy Nasdaq Composite tumbled 2.8 percent.

In Europe, Frankfurt fell 1.6 percent and Paris shed 1.2 percent. London ended the day less than 0.1 percent lower. 

“Investors are simultaneously fretting that the fall in the pace of hirings indicates a slowing economy, but also that the better-than-expected data shows that the jobs markets hasn’t slowed enough to stop the Fed from hiking rates aggressively,” said markets analyst Susannah Streeter at Hargreaves Lansdown brokerage.  

– ‘Pivot party gang’ –

Rising interest rates boost the dollar as foreign investors seek to buy dollar-denominated debt. But high interest rates raise borrowing costs and dampen consumption, which are bad for companies and thus their share prices.

Stephen Innes at SPI Asset Management said it is “unsurprising to see solid dollar buying with stocks and gold tanking as the labour market strength should quieten any Fed pivot talk for now, if not deal a severe knockout blow to the pivot party gang.”

The next data point that the Fed, and investors, will be scrutinising is the consumer price index report next week.

Adding to unease on markets was a warning from US President Joe Biden that the world faced nuclear “Armageddon” for the first time since the 1962 Cuban missile crisis.

He told a Democratic Party fundraiser in New York that Russian President Vladimir Putin was “not joking” when he threatened to use nuclear weapons over the Ukraine war.

Elsewhere, oil prices jumped and were set for their biggest weekly gain since March after OPEC and other major producers led by Russia agreed to slash daily output by two million barrels.

– Key figures around 1530 GMT –

New York – Dow: DOWN 1.5 percent at 29,480.26 points

EURO STOXX 50: DOWN 1.7 percent at 3,375.46

London – FTSE 100: DOWN less than 0.1 percent at 6,991.09 (close)

Frankfurt – DAX: DOWN 1.6 percent at 12,273.00 (close)

Paris – CAC 40: DOWN 1.2 percent at 5,866.94 (close)

Tokyo – Nikkei 225: DOWN 0.7 percent at 27,116.11 (close)

Hong Kong – Hang Seng Index: DOWN 1.5 percent at 17,740.05 (close)

Shanghai – Composite: Closed for a holiday

Pound/dollar: DOWN at $1.1119 from $1.1161 on Thursday

Euro/dollar: DOWN at $0.9787 from $0.9794

Euro/pound: UP at 87.95 pence from 87.74 pence

Dollar/yen: UP at 145.20 yen from 145.11 yen

Brent North Sea crude: UP 3.0 percent at $97.28 per barrel

West Texas Intermediate: UP 3.4 percent at $91.49 per barrel

burs-rl/kjm

Stocks mostly slid and the dollar surged Friday after US jobs data showed only a timid slowdown in the labour market, setting the stage for further aggressive interest rate hikes. 

Equity markets have taken a battering in the past couple of months as the US Federal Reserve has made it clear it intends to continue aggressively raising interest rates until soaring inflation is tamed, even if that means sending the economy into a recession.

There was a brief rebound at the start of the week as investors hoped data pointing to economic slowdown would allow the Fed to “pivot”, or slow down rate hikes.

However, the jobs report shows the US labour market is still robust, with hiring in the US economy slowing slightly in September, to a net gain of 263,000 jobs, from 315,000 in August. 

That was more than the consensus forecast for a net gain of 250,000, sending equities lower and the dollar higher. 

“The understanding that the report is unlikely to soften the Fed’s rate hike path has sent equity futures to lows while the dollar is showing continued strength against the euro and Sterling,” said Briefing.com analyst Patrick O’Hare before Wall Street opened.

Wall Street opened lower, with the Dow sliding 0.9 percent. The broader S&P 500 index fell 1.2 percent and the tech-heavy Nasdaq Composite tumbled 1.8 percent.

In afternoon trading, Frankfurt slid 0.8 percent and Paris shed 0.5 percent. London was flat.

– ‘Pivot party gang’ –

Rising interest rates boost the dollar as foreign investors seek to buy dollar-denominated debt. 

Stephen Innes at SPI Asset Management said it is “unsurprising to see solid dollar buying with stocks and gold tanking as the labour market strength should quieten any Fed pivot talk for now, if not deal a severe knockout blow to the pivot party gang.”

The next data point that the Fed, and investors, will be scrutinising is the consumer price index report next week.

Adding to unease on markets was a warning from US President Joe Biden that the world faced nuclear “Armageddon” for the first time since the 1962 Cuban missile crisis.

He told a Democratic Party fundraiser in New York that Russian President Vladimir Putin was “not joking” when he threatened to use nuclear weapons over the Ukraine war.

Elsewhere, oil prices jumped and were set for their biggest weekly gain since March after OPEC and other major producers led by Russia agreed to slash daily output by two million barrels.

– Key figures around 1330 GMT –

London – FTSE 100: FLAT at 6,996.98 points

Frankfurt – DAX: DOWN 0.8 percent at 12,376.54

Paris – CAC 40: DOWN 0.5 percent at 5,905.01

EURO STOXX 50: DOWN 0.9 percent at 3,403.52

New York – Dow: DOWN 0.9 percent at 29,651.01

Tokyo – Nikkei 225: DOWN 0.7 percent at 27,116.11 (close)

Hong Kong – Hang Seng Index: DOWN 1.5 percent at 17,740.05 (close)

Shanghai – Composite: Closed for a holiday

Pound/dollar: DOWN at $1.1145 from $1.1161 on Thursday

Euro/dollar: DOWN at $0.9764 from $0.9794

Euro/pound: DOWN at 87.62 pence from 87.74 pence

Dollar/yen: UP at 145.06 yen from 145.11 yen

Brent North Sea crude: UP 1.3 percent at $95.65 per barrel

West Texas Intermediate: UP 1.2 percent at $89.53 per barrel

burs-rl/lth

Equity markets steadied and the dollar fell Friday before all-important US jobs data that should offer clues on the pace of future interest rate hikes from the Federal Reserve.

Further US interest rate hikes are expected in the coming months to try and cool decades-high inflation.

However, markets are starting to price in a less aggressive pace of rate tightening than seen so far this year, easing fears of a global recession.

“Investors are turning more concerned about the aggressive Fed tightening and are ready to bet that the rate hikes would slow down in the next few meetings,” Swissquote analyst Ipek Ozkardeskaya noted before Friday’s jobs data.

Analysts expect the monthly report to show 250,000 posts were created in September, which would be the weakest since late 2020 but still a healthy figure suggesting a strong labour market. 

There is a fear that a result higher than expectations could spark another sell-off across risk markets as investors bet on more bumper rate hikes.

Fed officials have consistently warned that they are determined to ramp up borrowing costs to fight inflation, even at the expense of a recession — feeding worries among traders that the world economy is heading for such a scenario.

OANDA analyst Edward Moya said a consumer price index report next week was also on traders’ radars.

“Economists are not expecting a significant drop in pricing pressures, but many traders think that a cool report could happen and that will force the Fed to change their tune next week.”

While major European stock markets steadied Friday, Asian indices and Wall Street dropped overnight.

Adding to the unease was a warning from US President Joe Biden that the world faced nuclear “Armageddon” for the first time since the 1962 Cuban missile crisis.

He told a Democratic Party fundraiser in New York that Russian President Vladimir Putin was “not joking” when he threatened to use nuclear weapons over the Ukraine war.

Elsewhere, oil prices jumped and were set for their biggest weekly gain since March after OPEC and other major producers led by Russia agreed to slash daily output by two million barrels.

– Key figures around 1045 GMT –

London – FTSE 100: UP 0.1 percent at 7,006.14 points

Frankfurt – DAX: DOWN 0.1 percent at 12,459.38

Paris – CAC 40: UP 0.1 percent at 5,941.65

EURO STOXX 50: DOWN 0.2 percent at 3,426.51

Tokyo – Nikkei 225: DOWN 0.7 percent at 27,116.11 (close)

Hong Kong – Hang Seng Index: DOWN 1.5 percent at 17,740.05 (close)

Shanghai – Composite: Closed for a holiday

New York – Dow: DOWN 1.2 percent at 29,926.94 (close)

Pound/dollar: UP at $1.1190 from $1.1161 on Thursday

Euro/dollar: UP at $0.9796 from $0.9794

Euro/pound: DOWN at 87.53 pence from 87.74 pence

Dollar/yen: DOWN at 144.92 yen from 145.11 yen

Brent North Sea crude: UP 1.1 percent at $95.41 per barrel

West Texas Intermediate: UP 1.2 percent at $89.49 per barrel

Taiwanese semiconductor giant TSMC posted better-than-expected third-quarter profits on Friday as rivals warn that demand for consumer electronics is being hit by the global economic downturn.

Taiwan Semiconductor Manufacturing Company operates the world’s largest silicon wafer factories and produces some of the most advanced microchips used in everything from smartphones and cars to missiles.

Revenue for September was approximately TW$208.25 billion ($6.6 billion), down 4.5 percent from the month before but an increase of 36 percent from September last year. 

Third-quarter revenue at the world’s largest contract chipmaker also rose 48 percent on-year to about TW$613 billion ($19.4 billion), according to Bloomberg News calculations. 

TSMC’s results came the same day biggest rival Samsung Electronics warned it expects operating profits in the third quarter to fall 32 percent.

They also came as preliminary third-quarter sales at US chipmaker Advanced Micro Devices (AMD) missed projections by more than $1 billion.

TSMC’s results did not contain a forecast but the company is more shielded from a downturn in part because it produces some of the most advanced and smallest chips which are still highly sought after and in short supply.

The Taiwanese firm controls more than half of global foundry output, with clients including Apple and Qualcomm.

Equity markets fell and the dollar held gains as the optimism that coursed through trading floors earlier this week gave way to nervousness ahead of a massive US jobs report later Friday that could determine Federal Reserve rate hike plans.

Soft economic data out of Washington sent equities surging at the start of the week and dragged the greenback on hopes that the readings could allow the US central bank to slow its strict monetary tightening programme.

However, the uncertainty that has characterised the year so far has slowly returned and Wall Street’s three main indexes ended Thursday with fresh losses, with sights firmly on the non-farm payrolls (NFP) figures.

Analysts expect the monthly report to show 250,000 posts were created in September, which would be the weakest since late 2020 but still a healthy figure suggesting a strong labour market. 

There is a fear that a result higher than expectations could spark another sell-off across risk markets as investors bet on more bumper rate hikes.

Fed officials have consistently warned that they are determined to ramp up borrowing costs to fight four-decade-high inflation, even at the expense of a recession — feeding worries among traders that the world economy is heading for such a scenario.

“The pivot party gang dialled down their new-found enthusiasm overnight after hawkish central bankers expressed concerns over sticky inflation,” said SPI Asset Management’s Stephen Innes.

He pointed out that other central banks, including in Europe and Canada, had also flagged further tough measures.

Still, OANDA’s Edward Moya added that a consumer price index report next week was also on traders’ radars.

“Economists are not expecting a significant drop in pricing pressures, but many traders think that a cool report could happen and that will force the Fed to change their tune next week,” he said in a note.

“Fed messaging has been consistent and it will likely stay that way post-NFP. Rate hike and cut bets will likely have significant swings after next Thursday’s inflation report.”

Asian markets extended the New York retreat, with downbeat earnings from chipmakers — and a warning from South Korean titan Samsung — owing to a drop in demand that raised worries about the upcoming corporate reporting season.

Hong Kong led the losses in Asia after surging almost six percent Wednesday, while Tokyo, Sydney, Seoul, Wellington, Taipei, Mumbai, Bangkok and Jakarta were all in negative territory.

London, Paris and Frankfurt dipped and US futures were also in the red.

Adding to the unease was a warning from US President Joe Biden that the world faced nuclear “Armageddon” for the first time since the 1962 Cuban missile crisis and that he was trying to find Russian counterpart Vladimir Putin’s “off-ramp”.

He told a Democratic Party fundraiser in New York that Putin was “not joking” when he threatened to use nuclear weapons as his army faces a series of defeats in eastern Ukraine following his invasion in February.

The risk-off mood saw the dollar bounce Thursday after days of losses caused by traders lowering their rate expectations, and it built on the advance against most other units Friday.

The standout was sterling, which remained wedged below $1.12 and continued a rollercoaster that saw it hit a record low last week before recovering thanks to a Bank of England lifeline.

However, observers warned of more volatility in the pound as the government presses ahead with a debt-funded tax-cutting mini-budget, while the promised support from the BoE is due to end soon.

Oil prices edged up and were set for their biggest weekly gain since March after OPEC and other major producers led by Russia agreed to slash output by two million barrels, leading some analysts to predict a return to $100 a barrel by the end of the year.

– Key figures around 0810 GMT –

Tokyo – Nikkei 225: DOWN 0.7 percent at 27,116.11 (close)

Hong Kong – Hang Seng Index: DOWN 1.5 percent at 17,740.05 (close)

Shanghai – Composite: Closed for a holiday

London – FTSE 100: DOWN 0.1 percent at 6,988.31

Pound/dollar: DOWN at $1.1155 from $1.1161 on Thursday

Euro/dollar: UP at $0.9798 from $0.9794

Euro/pound: UP at 87.75 pence from 87.74 pence

Dollar/yen: DOWN at 144.90 yen from 145.11 yen

West Texas Intermediate: UP 0.3 percent at $88.72 per barrel

Brent North Sea crude: UP 0.3 percent at $94.66 per barrel

New York – Dow: DOWN 1.2 percent at 29,926.94 (close)

Asian markets fell and the dollar held an advance as the optimism that coursed through trading floors earlier this week gave way to nervousness ahead of a massive US jobs report later Friday that could determine Federal Reserve rate hike plans.

Soft economic data out of Washington sent equities surging at the start of the week and dragged the greenback on hopes that the readings could allow the US central bank to pivot and slow down its strict monetary tightening programme.

However, the uncertainty that has characterised the year so far has slowly returned and Wall Street’s three main indexes ended Thursday with fresh losses, with sights firmly on the non-farm payrolls (NFP) figures.

Analysts expect the monthly report to show 250,000 posts were created in September, which would be the weakest since late 2020 but still a healthy figure suggesting a strong labour market. 

There is a fear that a result higher than expectations could spark another sell-off across risk markets as investors bet on more bumper rate hikes.

Fed officials have consistently warned that they are determined to ramp up borrowing costs to fight four-decade-high inflation, even at the expense of a recession — feeding worries among traders that the world economy is heading for such a scenario.

“The pivot party gang dialled down their new-found enthusiasm overnight after hawkish central bankers expressed concerns over sticky inflation,” said SPI Asset Management’s Stephen Innes.

He pointed out that other central banks, including in Europe and Canada, had also flagged further tough measures.

Still, OANDA’s Edward Moya added that a consumer price index report next week was also coming on traders’ radars.

“Economists are not expecting a significant drop in pricing pressures, but many traders think that a cool report could happen and that will force the Fed to change their tune next week,” he said in a note. 

“Fed messaging has been consistent and it will likely stay that way post-NFP. Rate hike and cut bets will likely have significant swings after next Thursday’s inflation report.”

Asian markets extended the New York retreat, with downbeat earnings from chipmakers — and a warning from South Korean titan Samsung — raising worries about the upcoming corporate earnings season.

Tokyo, Hong Kong, Sydney, Seoul, Wellington, Taipei, Manila and Jakarta were all in negative territory.

Adding to the unease was a warning from US President Joe Biden that the world faced nuclear “Armageddon” for the first time since the 1962 Cuban missile crisis and that he is trying to find Russian counterpart Vladimir Putin’s “off-ramp”

He told a Democratic Party fundraiser in New York that Putin was “not joking” when he threatened to use nuclear weapons as his army faces a series of defeats in eastern Ukraine following his invasion in February.

The risk-off mood saw the dollar bounce Thursday after days of losses caused by traders lowering their rate expectations, and it held the advance in early Asian business.

The standout was sterling, which remained wedged below $1.12 and continued a rollercoaster that saw it hit a record low last week before recovering thanks to a Bank of England lifeline.

However, observers warned of more volatility in the pound as the government presses ahead with a debt-funded tax-cutting mini-budget, while the promised support from the BoE is due to end soon.

Oil prices edged down but are set for their biggest weekly gain since March after OPEC and other major producers led by Russia agreed to slash output by two million barrels, leading some analysts to predict a return to $100 a barrel by the end of the year.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 0.6 percent at 27,149.76 (break)

Hong Kong – Hang Seng Index: DOWN 0.9 percent at 17,836.92

Shanghai – Composite: Closed for a holiday

Pound/dollar: UP at $1.1164 from $1.1161 on Thursday

Euro/dollar: UP at $0.9797 from $0.9794

Euro/pound: UP at 87.77 pence from 87.74 pence

Dollar/yen: DOWN at 145.04 yen from 145.11 yen

West Texas Intermediate: DOWN 0.1 percent at $88.40 per barrel

Brent North Sea crude: DOWN 0.2 percent at $94.28 per barrel

New York – Dow: DOWN 1.2 percent at 29,926.94 (close)

London – FTSE 100: DOWN 0.8 percent at 6,997.27 (close) 

Global equity markets mostly fell Thursday and the pound retreated once more against the dollar on lingering recession fears despite hopes that the US Federal Reserve will tame the pace of aggressive interest rate hikes.

Oil prices advanced, building on gains made before OPEC and other major producers led by Russia decided to slash output by two million barrels per day.

OANDA market analyst Craig Erlam said European markets erased early gains as “investors take a cautious approach” ahead of Friday’s release of a US jobs report that could influence the Fed’s next move.

Wall Street stocks mostly moved lower, with the Dow shedding 0.3 percent.

Stocks had snapped higher at the start of this week as disappointing US economic data fuelled hopes that the Federal Reserve may let up in its campaign of aggressive interest rate hikes to get soaring inflation under control.

“The narrative in recent days of weaker data being positive as it could be a precursor to slower tightening didn’t seem sustainable and it’s already proving to be the case,” added Erlam.

Instead, he said he believed the rally to be a response to the sharp drop in shares in the previous weeks as the Fed made clear it would keep raising rates until inflation is brought down, even if that triggers a recession.

Investors are now looking forward to the release Friday of US non-farm payroll jobs data for the latest glimpse at how the economy is handling rising interest rates.

Data showing tougher labour market conditions could trigger a new relief rally, while a resilient figure could send stocks lower as investors fret about further rate hikes.

Data out Thursday showed first time unemployment claims dropped to 219,000, but that was above expectations.  

“The key takeaway from the report is that initial claims — a leading indicator — have a lot more scope for deterioration before the Fed can be convinced that its rate hikes have induced a sufficient softening in the labor market to ease wage-based inflation pressures,” said Patrick O’Hare at Briefing.com.

– Oil prices steady –

Oil prices advanced further after a decision by OPEC+ nations to cut production by two million barrels per day, the biggest reduction in output since the Covid-19 pandemic.

Oil prices, which had slumped to pre-Ukraine war levels in recent weeks as global recession worries mount, had surged in the days ahead of the OPEC+ meeting.

The production cut should support crude prices, but as high oil prices have been stoking the inflation that is prompting central banks to raise interest rates, the move will further exacerbate the situation.

“The oil producing nations want to support the oil market, but a high oil price hurts most nations, so in a roundabout way, the move will probably add to global inflation,” said analyst David Madden at Equiti Capital.

The pound was down about 1.1 percent against the dollar after Fitch ratings agency lowered the outlook for British debt to negative from stable.

This comes after the government of new Prime Minister Liz Truss recently announced a budget packed with debt-fuelled tax cuts.

Ahead of the downgrade Wednesday, sterling had plunged more than two percent after Truss failed to reassure investors with a speech at her Conservative party conference.

The pound, however, has recovered since reaching a record-low close to parity against the dollar at the end of September.

– Key figures around 1530 GMT –

New York – Dow: DOWN 0.3 percent at 30,178.58 points

EURO STOXX 50: DOWN 0.4 percent at 3,433.45

London – FTSE 100: DOWN 0.8 percent at 6,997.27 (close) 

Frankfurt – DAX: DOWN 0.4 percent at 12,470.78 (close)

Paris – CAC 40: DOWN 0.8 percent at 5,936.42 (close)

Tokyo – Nikkei 225: UP 0.7 percent at 27,311.30 (close)

Hong Kong – Hang Seng Index: DOWN 0.4 percent at 18,012.15 (close)

Shanghai – Composite: Closed for a holiday

Pound/dollar: DOWN at $1.1184 from $1.1326 on Wednesday

Euro/dollar: DOWN at $0.9828 from $0.9889

Euro/pound: UP at 87.91 pence from 87.29 pence

Dollar/yen: UP at 144.77 yen from 144.59 yen

Brent North Sea crude: UP 0.8 percent at $94.08 per barrel

West Texas Intermediate: UP 0.7 percent at $88.33 per barrel

burs-rl/kjm

Global equity markets mostly fell Thursday and the pound retreated once more against the dollar on lingering recession fears despite hopes that the US Federal Reserve will tame the pace of aggressive interest rate hikes.

Oil prices held steady, failing to build on gains after OPEC and other major producers led by Russia decided to slash output by two million barrels per day.

OANDA market analyst Craig Erlam said markets erased early gains as “investors take a cautious approach” ahead of Friday’s release of a US jobs report that could influence the Fed’s next move.

Wall Street stocks dipped at the start of trading with the Dow shedding 0.4 percent while European markets were down in afternoon deals.

Stocks had snapped higher at the start of this week as disappointing US economic data fuelled hopes that the Federal Reserve may let up in its campaign of aggressive interest rate hikes to get soaring inflation under control.

“The narrative in recent days of weaker data being positive as it could be a precursor to slower tightening didn’t seem sustainable and it’s already proving to be the case,” added Erlam.

Instead, he said he believed the rally to be a response to the sharp drop in shares in the previous weeks as the Fed made clear it would keep raising rates until inflation is brought down, even if that triggers a recession.

Investors are now looking forward to the release Friday of US non-farm payroll jobs data for the latest glimpse at how the economy is handling rising interest rates.

Data showing tougher labour market conditions could trigger a new relief rally, while a resilient figure could send stocks lower as investors fret about further rate hikes.

Data out Thursday showed first time unemployment claims dropped to 219,000, but that was above expectations.  

“The key takeaway from the report is that initial claims — a leading indicator — have a lot more scope for deterioration before the Fed can be convinced that its rate hikes have induced a sufficient softening in the labor market to ease wage-based inflation pressures,” said Patrick O’Hare at Briefing.com.

– Oil prices steady –

Oil prices failed to advance further after a decision by OPEC+ nations to cut production by two million barrels per day, the biggest reduction in output since the Covid-19 pandemic.

Oil prices, which had slumped to pre-Ukraine war levels in recent weeks as global recession worries mount, had surged in the days ahead of the OPEC+ meeting.

The production cut should support crude prices, but as high oil prices have been stoking the inflation that is prompting central banks to raise interest rates, the move will further exacerbate the situation.

The pound was down about 0.8 percent against the dollar after Fitch ratings agency lowered the outlook for British debt to negative from stable.

This after the government of new Prime Minister Liz Truss recently announced a budget packed with debt-fuelled tax cuts.

Ahead of the downgrade Wednesday, sterling had plunged more than two percent after Truss failed to reassure investors with a speech at her Conservative party conference.

The pound, however, has recovered since reaching a record-low close to parity against the dollar at the end of September.

– Key figures around 1330 GMT –

London – FTSE 100: DOWN 1.0 percent at 6,984.45 points

Frankfurt – DAX: DOWN 0.2 percent at 12,487.60

Paris – CAC 40: DOWN 0.7 percent at 5,944.41

EURO STOXX 50: DOWN 0.3 percent at 3,437.26

New York – Dow: DOWN 0.4 percent at 30,156.75

Tokyo – Nikkei 225: UP 0.7 percent at 27,311.30 (close)

Hong Kong – Hang Seng Index: DOWN 0.4 percent at 18,012.15 (close)

Shanghai – Composite: Closed for a holiday

Pound/dollar: DOWN at $1.1223 from $1.1326 on Wednesday

Euro/dollar: DOWN at $0.9835 from $0.9889

Euro/pound: UP at 87.66 pence from 87.29 pence

Dollar/yen: UP at 144.79 yen from 144.59 yen

Brent North Sea crude: UP less than 0.1 percent at $93.41 per barrel

West Texas Intermediate: FLAT at $87.76 per barrel

burs-rl/lth