Stocks mixed, dol­lar re­cov­er­ing be­fore US jobs re­port

The Pak Banker - - MARKETS/SPORTS -

The wait for US monthly jobs num­bers stead­ied stock mar­kets on Fri­day and al­lowed the dol­lar to re­cover af­ter its worst week in more than six years.

Oil prices were down by 0.5 to 1 per­cent and a mixed mood in Asia spread to Euro­pean stock mar­kets. Lon­don and Paris both gained; Frank­furt fell around half a per­cent. Jan­uary was the worst open­ing to a year for shares since the af­ter­math of the 2008 fi­nan­cial cri­sis. The out­look did not im­prove this week, as doubts grew about both the U.S. and the world econ­omy.

Short-term U.S. in­ter­est rates fell again - two-year yields are down 10 ba­sis points on the week - driv­ing the dol­lar to its worst per­for­mance since late 2009.

A solid non-farm pay­rolls re­port might re­store some op­ti­mism. The con­sen­sus fore­cast of econ­o­mists polled by Reuters was that 190,000 new jobs were cre­ated last month.

"There is a gen­eral skep­ti­cism to­wards a proper rate hike cy­cle by the Fed - that's been driv­ing down the dol­lar (but)there's prob­a­bly not that much room left for dol­lar weak­ness," Com­merzbank cur­rency strate­gist Thu­lan Nguyen, in Frank­furt. "A bet­ter labour mar­ket re­port could bring back some con­fi­dence in the rate cy­cle." The dol­lar gained just over 0.1 per­cent on the day against both the euro and yen, to $1.1192 and 116.925 yen re­spec­tively EUR= JPY=. Against a bas­ket of cur­ren­cies, it is down 1.3 per­cent on the week. .DXY

Af­ter a weak sen­ti­ment re­port on Wed­nes­day and dovish com­ments from New York Fed­eral Re­serve chief Wil­liam Dudley, U.S short-term mar­ket rates now pre­dict no rise in of­fi­cial rates this year. Ear­lier, the Fed­eral Re­serve's own fore­cast­ing called for four in­creases.

That re­flects grow­ing con­cern the world is head­ing back into re­ces­sion. But it also bol­sters ex­pec­ta­tions for more sup­port for global as­set prices from stim­u­lus mea­sures by the world's cen­tral banks. Hong Kong's Hang Seng . HSI rose 0.6 per­cent and Malaysian .KLSE and Sin­ga­pore stocks also gained .STI. tokyo .N225, Shang­hai .SSEC and var­i­ous com­mod­ity prices all fell. CMCU3 Strate­gists said Euro­pean bond mar­kets looked to be pric­ing in a softer read from the U.S. pay­rolls re­port.

"We doubt that even a strong non­farm pay­rolls num­ber will have the po­ten­tial to al­ter the course," said RBC's chief Euro­pean macro strate­gist, Peter Schaf­frik. "More im­por­tantly even, par­tic­u­larly for the fixed in­come mar­ket: The Fed seem­ingly is re­act­ing to the equity mar­ket weak­ness, fear­ing the feed through into the real econ­omy through a tight­en­ing in fi­nan­cial con­di­tions."

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