Asian stock indexes started the week’s final trading session in the red and the dollar rose ahead of a key US jobs report expected later today. Investors are bracing for more aggressive rate hikes by the Federal Reserve, while new lockdowns in China fueled concerns about global economic growth.
The U.S. economy likely added 300,000 new jobs in August, keeping the unemployment rate around 3.5 percent, according to consensus analysts’ estimates cited by Reuters. But if the labor market data turns out to be bluer than expected, investors may not take it as good news, as it would give the Federal Reserve an argument to continue aggressive monetary tightening.
Currently, futures markets estimate the chance of a 75 basis point US rate hike at around 75%.
This morning, regional benchmark MSCI Asia Pacific fell 0.5%, heading for its worst weekly performance since mid-June. Since Monday, it has lost 3.6% of its value.
Japan’s Nikkei 225 fell 0.1% in morning trade, China’s shares lost 0.5% and Hong Kong’s Hang Seng fell 1%.
On Thursday, the southwestern Chinese metropolis of Chengdu announced a lockdown of its 21.2 million residents, while the technology hub of Shenzhen also introduced new social distancing rules. More and more Chinese cities are grappling with the outbreak of new outbreaks of COVID-19.
As the war dragged on, Europe’s economy succumbed to the crisisIt was supposed to be Europe’s stellar year, but everything changed on February 24 with Russia’s invasion of Ukraine. Normality disappeared, and crisis became permanent
Analysts at Nomura say what is becoming increasingly worrisome is that China’s COVID-19 hotspots are shifting from remote regions and cities to provinces that matter much more to China’s national economy.
The price of oil fell 3% overnight, but recovered some of the lost ground this morning. The main reason for the decline was the concern of market participants about a decrease in global demand.
Brent futures were up 2% on Friday morning at $94.15 a barrel, while U.S. light crude futures were up 1.5% at $88.34 a barrel.
In currency markets, the dollar index, which measures the greenback’s strength against a basket of six major currencies, hovered near a 20-year high. Against the yen, the dollar is trading at a 24-year high of over 140 yuan to the dollar.