Thursday, February 22, 2024

Global stocks, Wall St. futures sink ahead of US jobs update

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BEIJING — Global stock markets and Wall Street futures fell Friday ahead of a U.S. job market update amid unease about possible further interest rate hikes.

Markets in London, Shanghai, Frankfurt and Tokyo declined. Oil prices were lower.

Wall Street’s benchmark S&P 500 index fell Thursday by its biggest one-day margin this year after Federal Reserve Chair Jerome Powell warned rates might be raised faster than expected to cool stubbornly high inflation.

Traders looked ahead to U.S. government hiring data due out Friday after other indicators showed the job market has stayed strong despite repeated interest rate hikes. That is good for workers, but Fed officials worry rising wages might fuel inflation. That might lead to more rate hikes to dampen business activity and hiring.

Fed officials are “clearly messaging that rates will move higher,” Rubeela Farooqi of High Frequency Economics said in a report.

In early trading, the FTSE 100 in London fell 1.5% to 7,760.88 and Frankfurt’s DAX tumbled 1.9% to 15,329.28. The CAC 40 in Paris fell 1.9% to 7,177.35.

On Wall Street, futures for the S&P 500 and the Dow Jones Industrial Average were down 0.7%.

On Thursday, the S&P 500 fell 1.9%, further eroding this year’s gains. Some 95% of companies in the benchmark index declined.

The Dow lost 1.7% and the Nasdaq composite sank 2.1%.

SVB Financial Group lost 60% of its value after announcing plans to raise up to $1.75 billion to strengthen its financial position amid concerns about higher interest rates and the economy. Bank of America, Citigroup and other big banks fell sharply.

In Asia, the Shanghai Composite Index fell 1.4% to 3,230.07 and the Nikkei 225 in Tokyo tumbled 1.7% to 28,143.97. The Hang Seng in Hong Kong slid 3% to 19,319.92.

The Kospi in Seoul gave up 1% to 2,394.59 and Sydney’s S&P-ASX 200 lost 2.3% to 7,144.70.

India’s Sensex declined 1.2% to 59,085.70. New Zealand and Southeast Asian markets declined.

Powell said earlier in the week the Fed was ready to impose more big rate hikes if necessary. That added to fears the Fed and other central banks might push the global economy into at least a brief recession to extinguish inflation.

A government report on Thursday showed the number of Americans applying for unemployment benefits last week jumped by the most in five months but layoffs are low.

Yields on the two-year Treasury, which tends to track expectations for future Fed action, eased to 4.87% from about 5.05% just before the unemployment report’s release. It had been hovering at its highest level in 16 years.

A report Wednesday showed the number of job openings advertised across the country last month was higher than economists expected.

Traders expect the Fed to raise its benchmark lending rate by an unusually large margin of 0.5 percentage points at its March 22 meeting. That is up from an expectation of 0.25 points before Powell’s comments this week, according to CME Group.

U.S. inflation edged up to 5.4% in January, well above the Fed target of 2%. The central bank has already raised its key rate to a range of 4.50% to 4.75%, up from close to zero at the start of 2022, its fastest set of hikes in decades.

Companies have been cautious about their prospects in 2023. Economists expect profits to fall through the first half.

In energy markets, benchmark U.S. crude lost 80 cents to $74.92 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 94 cents the previous session to $75.72. Brent crude, the price basis for international oil trading, declined 64 cents to $80.95 per barrel in London. It sank $1.07 the previous session to $81.59.

The dollar gained to 136.39 yen from Thursday’s 136.17 yen. The euro rose to $1.0587 from $1.0578.

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