Shares slip on China growth jitters as Fed minutes loom

London/Sydney July 5 (BNA): Global stocks fell on Wednesday as fresh signs of a faltering economic recovery emerged in China, as traders await minutes from the US Federal Reserve meeting and a key US jobs report later in the week for clues to the bank’s outlook. central interest rates. .

In quiet trading after the Independence Day holiday on Wall Street on Tuesday, European stocks fell 0.6%, with German shares down the same amount, Reuters reported.

Wall Street also took losses, with S&P 500 and Nasdaq futures down 0.2% -0.4%.

China’s services sector, which has rebounded strongly since the lifting of COVID-19 lockdowns, expanded at the weakest pace in five months in June, a survey showed, adding to signs of a weak recovery in the world’s second-largest economy.

The release of minutes from the Federal Reserve’s latest policy meeting, due later on Wednesday, and the non-farm payrolls report on Friday will top the agenda for traders this week as they watch to see if the Fed will need to hike more than once to stem inflation.

“The focus is very much on whether inflation has peaked; has it peaked; how many price hikes will go down with the up?” said Michael Hewson, chief market analyst at CMC Markets.

The MSCI World Equity Index, which tracks stocks in 47 countries, was down 0.2%.

Markets are almost certain the Fed will hike in July after stalling last month, but it only has a 32% chance that it will need another hike by October.

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Traders say the US jobs data is also important.

Economists polled by Reuters had expected the US to have added 225,000 jobs last month, slowing from 339,000 jobs in May, while growth in median earnings is likely to be flat at 0.3% from the previous month.

“It’s almost a race as to whether inflation will fall fast enough to allow policymakers to unwind before the growth dynamic turns into recession,” said Jay Miller, chief market strategist at Zurich Insurance Group.

The US dollar has drifted near the middle of its range over the past three weeks against its major peers, with the dollar index down 0.1% to 102.99, after tracking between 103.75 and 102.75 since early June.

Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7% after China’s data. Japan’s Nikkei fell 0.3% on profit-taking, after climbing to a three-decade high.

Chinese blue chips fell 0.8% and Hong Kong’s Hang Seng Index fell 1.6%.

Elsewhere in the currency markets, movements have been largely muted. The yen rose 0.1% to 144.59 per dollar, just below 145.07, which was its weakest level in eight months as fears of official intervention spread.

Short-term Treasury yields fell 2 basis points to 4.9215% while 10-year yields were little changed.

The euro rose 0.2% to $1.0898, adding to a 0.34% drop overnight.

Oil prices gave up some of their gains on Wednesday after advancing on supply concerns stemming from production cuts by major producers Saudi Arabia and Russia.

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Brent crude futures fell 0.2% to $76.05 a barrel, after rising 2.1% overnight.


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