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Stock Today: Global Shares Plunge on US Jobs Data

STOCK TODAY – Global stocks started the week on shaky footing after the strong US jobs data dampened expectations that the Federal Reserve will implement large rate cuts.

Asian shares were drowning in red, while European markets inched down. The latter markets managed to reduce losses on Deutsche Bank’s overhaul kickoff.

MSCI’s index of Asia-Pacific shares ex-Japan dropped 1.4%. As that happened, Japan’s Nikkei lost 1%.

In China, traders sold off Chinese stocks. The blue-chip index CSI300 shrank 2.2% while Hong Kong’s Hang Seng index declined 1.8%.

In South Korea, KOSPI fell 2.1%, while Australian shares dipped about 1.2% to a five-week low.

In Europe, the pan-European STOXX 600 index lost 0.07%, diving in lockstep with Asian markets.

Germany’s DAX dropped 0.5%, while London’s FTSE sank 0.3%.

Pressures on Stocks Today

Various factors came in on Monday and weighed down stocks all over the world.

One of them was US investment bank Morgan Stanley’s decision to decrease its exposure to global equities. It cited misgivings over the ability of policy easing to offset weaker economic data.

According to Andrew Sheets, one of the bank’s strategists, they are lowering exposure to a “range we consider ‘underweight’.”

Sheets cited expensive valuations and pressure on earnings as reasons for the downgrade. The bank increased its exposure to emerging markets’ sovereign credit. It also included more Japanese government bonds.

US Jobs Growth Affects Stocks

The market for stock today appears to be running on the back of expectations for Federal Reserve cuts. However, expectations decreased after a US labor report showed non-farm payrolls increased 224,000 in June.

This topped expectations for only 160,000 jobs, indicating the world’s largest economy is still pumping.

After the release of the data, traders are expecting Federal Reserve Chairman Jerome Powell to go easy on rate cuts.

Markets now price in a 27 basis points easing for the month. That is lower from 33 basis points before the data release.

In his semi-annual testimony to the Congress this week, Powell will give out clues on the near-term outlook for policy.

Interest rate cuts and outlook for monetary policy are key points that traders have been focusing in the recent weeks.

Interest Rate Cuts in Other Markets

Meanwhile, the forex markets focused on the Turkish lira, which lost 5.7930 per dollar. This is its lowest since June 28.

Turkish central bank governor Murat Cetinkaya lost his position to his deputy, Murat Uysal.

Turkish president Tayyip Erdogan fired Cetinkaya after the former governor refused demands for cut rates. This laid bare the differences in their opinions over the timing of interest rate cuts.

The dollar index dropped to 97.245 after achieving a 2-and-a-half-week low of 97.443.

The euro also fell, trading at $1.1224. This was just a spit’s distance away from a 2-and-a-half week low of $1.1205.

The Australian dollar slipped lower than 70 cents, last trading at $0.6985.

Geopolitics may also play a role, with Iran allegedly boosting its uranium enrichment. This could be a breach of a cap set by a 2015 nuclear agreement.



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