Global stocks rose on Friday and the dollar fell from a 24-year high against the yen after data showed the U.S. labor market is beginning to ease investor fears over aggressive interest rate hikes by the Federal Reserve.
* US employers hired more workers than expected in August, but subdued wage growth and a rise in the unemployment rate to 3.7% could ease pressure on the Fed for a third rate hike. rates of 75 basis points this month.
* This buoyed investors, helping Wall Street’s three major indices gain more than 1% by 1547 GMT. The pan -European STOXX 600 jumped 2% from six-week lows hit on Thursday, while Britain’s FTSE improved 1.9%.
* The rally in stock markets helped MSCI’s world stock index gain 1.2%. However, in the week it is headed for a drop of 1.9%, which would mean the third consecutive drop.
* New lockdowns in China had previously fueled concerns about global growth, and high energy costs from the war in Ukraine are weighing on Europe.
* “The market is focused on how aggressive the Fed is going to be with its rate hike cycle,” said Giles Coghlan, chief currency analyst at HYCM, adding that rate hike expectations have solidified since last week’s speech. Fed Chairman Jerome Powell in Jackson Hole.
* Markets are worried about “the slowdown in China, the recession in the euro zone and a hard-line Federal Reserve,” he said.
* The dollar, which benefits from rate hikes, hit a new 24-year high against its Japanese pair at 140.80 yen, prompting Japanese Finance Minister Shunichi Suzuki to warn of adopting “appropriate” measures to curb volatility. By noon in New York, the yen had fallen to 140.07 units.
* The dollar index , which compares the greenback to a basket of six major currencies, fell 0.6% to 108.95, after hitting a 20-year high in the previous session. A weaker dollar pushed the euro up 0.8% to $1.0027.
* In fixed income markets, the two-year US Treasury bond yield fell to 3.4141%, after hitting a 14-year high of 3.5510% the day before. The return on the 10-year notes fell to 3.2139%.
* MSCI’s broader index of Asia-Pacific stocks excluding Japan lost 0.6%, its worst weekly performance since mid-June, plunging 3.6%. Japan ‘s was flat and Chinese equities fell 0.5%.
* Crude oil prices gained around 1.75%, recouping much of their recent losses on expectations OPEC+ will discuss production cuts next week, and spot mproved 1.2%, at $1,716.89 per ounce.