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World stocks fluctuate, bonds stabilize as recession worries weigh




  • Wave of weak US data fuels fears of slowdown
  • US jobs data is due on Friday, when many markets are on holiday
  • Shares, oil weak while bonds and dollar firm
  • Gold heading for weekly gains

LONDON/TOKYO, April 6 (Reuters) – Global shares drifted on Thursday and U.S. Treasury yields hovered near multi-month lows as traders awaited key U.S. jobs data that could add to growing concerns about a global economic slowdown.

As equity investors shun strong bets ahead of the Good Friday holiday when the market-moving monthly US non-farm payrolls report will also be released, MSCI’s broad index of world shares (.MIWO00000PUS) traded flat.

Europe’s Stoxx 600 (.STOXX) stock index rose 0.3%, boosted by data showing German industrial production rose significantly more than forecast in February. But fears of a recession weighed on US stock futures and crude oil.

US Nasdaq E-mini futures pointed to a 0.5% drop at the open in New York, after the benchmark index of technology shares fell 1% overnight. E-mini futures for the broader S&P 500 fell 0.1%, following Wednesday’s 0.25% plunge.

After the US central bank’s most aggressive rate hike cycle in decades, to combat stubbornly high inflation, traders are now positioning for the central bank to become much more dovish.

Overnight data showed US private employers hired far fewer workers than expected in March, adding to signs from earlier in the week of a loosening labor market.

The country’s service sector also declined more than expected, while earlier figures also showed a halt at the factories.

“What we’re seeing this week is the rate hikes having an impact on the wider economy for about the first time,” said Roger Lee, head of UK equity strategy at Investec.

“The market is extrapolating this fresh data for the belief that there is going to be a US recession immediately.”

Economists polled by Reuters expect to see US employers add 240,000 new workers in March, down from 311,000 the previous month. Average earnings growth is also expected to have slowed to 4.3% year-on-year, from 4.6% in March.

Money markets now see the odds of a further quarter-point increase at the May meeting versus a pause as a coin toss. And 74 basis points for relief have been priced in at the end of the year.

“Investors should not rush to buy the pivot because once the Fed cuts interest rates, it is too late to prevent a recession,” said Barclays European equity strategist Emmanual Cau.

Treasury yields, which move inversely to the prices of debt securities, have fallen far in recent weeks as traders added risk to bond markets rather than stocks.

The yield on the 10-year note was around 3.29% on Thursday morning in London, holding close to a near seven-month low of 3.266% reached overnight.

Germany’s 10-year bund rate, a benchmark for borrowing costs in the eurozone, gained 2 basis points to 2.2%.

That German yield is now well below the level of around 2.7% from early March, before the failure of two US banks and Credit Suisse’s rescue of UBS sparked concerns that banks are lending cautiously to secure capital, potentially hurting growth.

The dollar index was steady against other major currencies at 101.84, hovering around a two-month low.

Spot gold fell 0.1% from a one-year high hit on Wednesday to $2,019 an ounce, but remained more than 2% higher for the week.

Oil was also under pressure, despite a surprise decision to cut output by OPEC+ producers at the weekend. Brent crude, the global benchmark, fell 0.3% to $84.76 a barrel.

Reporting by Kevin Buckland in Tokyo and Naomi Rovnick in London; Editing by Christopher Cushing, Edmund Klamann, Sonali Paul and Andrew Heavens

Our standards: Thomson Reuters Trust Principles.



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