US stock indexes post their third consecutive weekly loss
European shares rose 2% on Friday, gaining for the first time in 6 sessions after US jobs data eased bets on the Federal Reserve’s monetary policy tightening further, but fell for the third week in a row on fears of rising energy prices.
US stock indices ended the trading session lower on Friday, recording weekly losses, with continued concern about an interest rate hike by the Federal Reserve.
And US market indices failed to maintain their gains recorded earlier in the session, despite the jobs report that came in better than expectations regarding the number of new jobs added by the economy.
Wall Street investors continued to fear after Federal Reserve Chairman Jerome Powell’s comments last week about continuing to raise interest rates until inflation slows.
Technology stocks suffered strong losses, as “Tesla” and “Apple” shares fell by 2.5% and 1.4%, respectively, and “Nvidia” shares continued its losses after the imposition of US restrictions on sales of some chips to China.
The Dow Jones Industrial Average fell 1.07%, or 338 points, to record 31.318 thousand points, recording a weekly loss of 3%.
The “S&P 500” also fell by 1.07%, or 42 points, at 3,924 points, declining by 3.3% in the total this week.
The Nasdaq index fell 1.3%, equivalent to 154 points, to record 11,630 thousand points, and down 4.2% this week.
European stocks
European shares rose 2% on Friday, gaining for the first time in 6 sessions after US jobs data eased bets on the Federal Reserve’s monetary policy tightening further, but fell for the third week in a row on fears of rising energy prices.
The pan-European Stoxx 600 index rose 2%, but recorded a weekly decline of the same percentage.
Data showed that US employers hired more workers than expected in August, but moderate wage growth and a rising unemployment rate could ease pressure on the Federal Reserve to raise interest rates by 75 basis points this month.
In terms of corporate stocks, Credit Suisse shares rose 6.1% after reports that the second largest bank in Switzerland is considering cutting about 5,000 jobs in a campaign to cut costs.
Ryanair shares settled at 2% as the Irish budget airline saw a record number of passengers in August for the fourth consecutive month.
Weak Volvo Cars sales in August pushed the Swedish company’s shares down 1.9%.
Mining shares fell more than 6% this week, with metal prices falling on the back of renewed fears that China’s closure policy to combat Covid-19 and raising interest rates will affect the demand for commodities.
Japan shares
Japan’s Nikkei index posted its worst week in nearly three months on Friday, while ending the day flat, and was pressured by fears of aggressive interest rate hikes globally, while a weak yen provided little support.
The Nikkei closed down 0.04% to 27,650.84 points, and recorded a weekly decline of 3.4%, in its worst loss since mid-June.
The broader Topix index fell 0.27% to 1930.17, after touching a 6-week low at 1,926.05 earlier in the session, and the index lost 2.5% this week.
Market expectations for a US interest rate hike, hurting sentiment in stocks, have been growing since Federal Reserve Chairman Jerome Powell’s speech last week, which reiterated his focus on curbing inflation above all.
“A lot of stock markets, including Japan, think the upside is very limited, because of this (hard-line) stance of the Federal Reserve,” said Masayuki Kishikawa, chief macro strategist at Sumitomo Mitsui Asset Management.
Tech companies have been particularly hard hit by the hawkish stance on interest rate hikes, making the sector the biggest drag in the broader market on Friday.
Shares of Nixon Video Games, which touched a 6-month low after reporting quarterly earnings Thursday, fell 3.06%, the biggest pressure on the Nikkei index.
Trend Micro’s stock fell 1.68% and lost more than 7% during the week, as the cyber security company’s stock fell from its two-decade high last month.
The focus now turns to US employment data due later Friday, which if strong could boost expectations of a 75 basis point interest rate hike by the central bank later in September, and also to the currency market where the yen hit a 24-year low.
“Of course, the weak yen helped exporting companies’ profits,” said Sumitomo’s Kichikawa.
unemployment rates
In economic data, US employers slowed the pace of employment in August after the sudden rise in the previous month while unemployment rates rose.
Even as the pace slows, additional jobs are pushing employment rates above pre-pandemic levels, the US Department of Labor said in its closely watched monthly report.
The number of jobs increased by 315,000 jobs last month, according to the report, in line with economists’ expectations, following an increase of 526,000 jobs in July, according to AFP.
However, the unemployment rate rose again to 3.7% after declining to 3.5% in the previous month, according to the data.
The Federal Reserve is closely monitoring developments in the job market for signs of improvement, as it seeks to boost the economy by raising interest rates to curb inflation, which has reached its highest level in 40 years.
The data showed that wages continued to rise in August, as the average hourly wage rose an additional 10 cents, or 0.3%, to reach $32.26, and over the past 12 months, workers’ wages increased by 5.2%.
The continuing upward pressure is worrying, as the Federal Reserve fears that this will lead to higher inflation.
interest rate increase
On her part, Loretta Mester, President of the Cleveland Reserve Board and a member of the US Federal Reserve (Central Bank), stressed the need to increase the main interest rate in the United States to more than 4% by early this year and maintain it for a period of time to help reduce the inflation rate.
Mester said she did not expect the Fed to cut interest rates over the next year.
“My current view is that it will be necessary to raise the interest rate to more than 4% by early next year and keep it at that level” for a while, Bloomberg News quoted Mester as saying, adding, “I don’t expect the Fed to start cutting rates during the year.” next.”
Several Federal Reserve officials had talked during the past and current weeks about the continuation of increasing interest rates to curb inflation, which reached its highest level in more than 4 decades.
The minutes of the US Federal Reserve’s (Central Bank) meeting last July, published earlier this month, confirmed the Fed’s intention to continue increasing interest rates in order to reduce the inflation rate to the target level of 2% annually.
The minutes revealed the belief of the participants in the meeting of the Open Market Committee concerned with managing monetary policy at the Federal Reserve that it will be necessary to move towards a “tough policy stance” in light of the continued inflation rate much higher than the council’s target.
The Board is scheduled to hold its next meeting on September 20-21, with expectations of an interest rate increase of between 50 and 75 basis points.