© Reuters. FILE PHOTO: A man walks under an electronic screen displaying Japan’s Nikkei stock price index inside a hall in Tokyo, Japan June 14, 2022. REUTERS/Issei Kato
By Wayne Cole
SYDNEY (Reuters) – Global stock markets wavered on Monday as a flurry of soft US data suggested downside risks to this week’s June payrolls report, while recession buzz has The odds are still spurring a slight rally in government bonds.
The search for safety kept the US dollar near 20-year highs, although the initial action was mild with US markets taking a break.
Cash Treasuries closed but futures extended their gains, showing 10-year yields holding around 2.88%, down 61 basis points from the June peak.
MSCI’s broadest index of Asia-Pacific shares outside Japan was unchanged, while rising 0.6%.
China’s blue chips were mostly flat as cities in eastern China tightened COVID-19 restrictions on Sunday amid new coronavirus clusters.
EUROSTOXX 50 terms plus 0.5% and terms 0.6%. However, both futures and Nasdaq fell 0.6%, after stabilizing slightly on Friday.
David J. Kostin, an analyst at Goldman Sachs (NYSE:), noted that every bar energy sector posted negative returns in the first half of the year amid extreme volatility.
He added: “The current bear market is based purely on valuation and not as a result of earnings estimates.
“However, we believe that the falling consensus margin forecast will lead to a downward adjustment in EPS whether the economy slips into recession or not.”
Earnings season kicks off July 15, and expectations are being ticked lower due to high costs and falling data.
The Atlanta Federal Reserve’s much-watched GDP Now forecast fell to a -2.1% annualized rate in the second quarter, implying that the country has slipped into a technical recession.
Friday’s payrolls report is forecast to show job growth slowing to 270,000 in June with median earnings slowing to 5.0%.
PRICE UP, THEN DOWN
However, the minutes of the Fed’s June policy meeting on Wednesday were almost certainly hawkish as the committee chose to raise rates by a micro-75 basis points.
The market is pricing in an 85% chance of another 75 basis point rally this month and interest rates at 3.25-3.5% by year-end.
“But the market has also turned to price in an increasingly positive rate-cut profile for the Fed in 2023 and 2024, consistent with a growing recession possibility,” NAB analysts note. , analysts at NAB note.
“The Fed’s roughly 60bps cuts are now priced into 2023.”
In currencies, investor demand for the most liquid safe harbor tends to benefit the US dollar, near two-decade highs against a basket of competitors at 105.04.
The euro was flat at $1.0432 and not far from the recent five-year low of $1.0349. The European Central Bank is expected to raise interest rates this month for the first time in a decade and the euro could be lifted if it decides on a more aggressive half-point move.
The Japanese yen also attracted some safe-haven outflows late last week, pulling the dollar back to 135.05 yen from a 24-year peak of 137.01.
A high dollar and rising interest rates are not the sort for unprofitable gold, which was pegged at $1,810 an ounce after hitting a six-month low last week. [GOL/]
Fears of a global recession also undermined the industrial metal as it hit a 17-month low, down 25% from its March peak. [MET/L]
Oil prices fell as investors worried about demand amid supply constraints. Production restrictions in Libya and a planned strike among Norwegian oil workers are just the latest blows to production. [O/R]
fell 34 cents to $111.29, while down 30 cents to $108.13 a barrel.
(Editing by Wayne Cole; Editing by Sam Holmes & Shri Navaratnam)