- Wave of weak US data fuels slowdown fears
- US jobs data to be released on Friday, when many markets are on holiday
- Stocks, oil weak while bonds, dollar firm
- Gold on track for weekly gains
LONDON/TOKYO, April 6 (Reuters) – Global stocks fell on Thursday and US Treasury yields neared multi-month lows as traders awaited crucial US jobs data that may rise concerns about a global economic slowdown.
As equity investors avoid big bets, ahead of the Good Friday holiday, when the monthly US Nonfarm Payrolls report will also be released.
The Stoxx 600 European stock index (.STOXX) rose 0.3%, buoyed by data showing German industrial production rose significantly more than expected in February. But recession fears weighed on US stock and crude oil futures.
US Nasdaq E-mini futures pointed to a 0.5% drop at the New York open, after the benchmark tech stock index fell 1% overnight. E-mini futures for the broader S&P 500 were down 0.1%, after falling 0.25% on Wednesday.
Following the US Federal Reserve’s most aggressive rate hike cycle in decades to fight stubbornly high inflation, traders are now positioning for the central bank to go much more dovish.
Overnight data showed that US private employers hired far fewer workers than expected in March, adding to signs earlier in the week of a loose labor market.
The country’s service sector also slowed more than expected, while earlier figures also showed stagnation in factories.
“What we’re seeing this week is those rate hikes having an impact on the broader economy for the first time,” said Roger Lee, head of UK equity strategy at Investec.
“The market is extrapolating this recent data out of belief that there is going to be an imminent US recession.”
Economists polled by Reuters expect US employers to add 240,000 new workers in March, up from 311,000 the previous month. Average earnings growth is also expected to have slowed to 4.3% year-over-year, from 4.6% in March.
Money markets now see the odds for a further quarter point rise at the May meeting versus a pause as a coin toss. And 74 basic points of flexibility are discounted for the end of the year.
“Investors should not rush to buy the pivot, as by the time the Fed cuts rates it is too late to avoid a recession,” Barclays chief European equity strategist Emmanual Cau said.
Treasury yields, which move inversely to debt prices, have fallen sharply in recent weeks as traders added risk in bond markets rather than stocks.
The 10-year bond yield traded around 3.29% on Thursday morning in London, holding close to the nearly seven-month low of 3.266% struck overnight.
The yield on the German 10-year bond, a benchmark for euro zone borrowing costs, added 2 basis points to 2.2%.
This German yield is now well below its level of around 2.7% in early March, before the failure of two US banks and UBS’s bailout of Credit Suisse raised concerns about lending banks. cautiously to safeguard capital, which could hurt growth.
The dollar index was flat against other major currencies at 101.84, hitting a two-month low.
Spot gold fell 0.1% from a one-year high reached on Wednesday to $2,019 an ounce, but remained more than 2% higher for the week.
Oil was also under pressure, despite a surprise production cut decision by OPEC+ producers over the weekend. Brent crude, the global benchmark, was down 0.3% at $84.76 a barrel.
Reporting by Kevin Buckland in Tokyo and Naomi Rovnick in London; Edited by Christopher Cushing, Edmund Klamann, Sonali Paul, and Andrew Heavens
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