Global stocks drop and yen rises as volatility reigns
Updates at 0815 GMT
By Harry Robertson and Kevin Buckland
LONDON/TOKYO, Aug 8 (Reuters) - European stocks fell and U.S. futures slipped on Thursday after turbulent sessions in Asia and on Wall Street, asinvestors struggled to find their footing in a wild week for markets.
The yen and U.S. bonds rose as traders waited for U.S. weekly jobless claims data, which has taken on extra significance after weak employment numbers helped spark Monday's market rout .
Europe's continent-wide Stoxx 600 .STOXX index fell 1% in early trading after climbing 1.5% on Wednesday. Germany's DAX index GDAXI was down 0.6% and Britain's FTSE 100 .FTSE dropped 1.1%.
Futures for the U.S. S&P 500 .SPX were down 0.4%. The index fell 0.8% the previous day, having given up gains of as much as 1.7% in morning trading.
"When you have a volatility shock like this, and you have a degree of unwind in certain positions, you're very prone to sudden reversals and also a degree of uneasiness as the adjustment continues," said Erik Nelson, macro strategist at Wells Fargo.
"I would be surprised if we just went back to everything being fine."
Japan's Nikkei share index .N225 swung from early losses of as much as 2.5% and gains of 0.8% before finishing 0.7% lower.
Weak U.S. jobs data last week has combined with a dramatic rally in the Japanese yen and concerns about an artificial intelligence bubble to send stocks tumbling.
The S&P 500 tumbled 3% on Monday and sits 2.8% lower for the week - although it remains around 9% higher for the year.
YEN BOUNCES AROUND
Japan's yen JPY=EBS rebounded somewhat on Thursday, adding to investor unease, after dropping around 1.6% on Wednesday. The dollar was last down 0.6% at 145.76 yen.
The yen has surged 11% since hitting a 38-year low in July, helped by intervention from authorities, a surprise Bank of Japan rate hike , and a U.S. jobs slowdown that has weighed on the dollar.
The rally has forced investors to dramatically unwind carry trades , where they borrow cheaply in Japan to buy dollars and other currencies to invest in higher yielding assets such as bonds and tech stocks, and helped trigger a 12% plunge in Japanese stocks on Monday.
Deputy BOJGovernor Shinichi Uchida on Wednesday played down the chance of another near-term hike, but minutes released onThursday revealed a hawkish slant among the board.
The U.S. dollar index =USD was down 0.2% at 102.93, after hitting an eight-month low of 102.69 on Monday. The euro EUR=EBS and the pound GBP=D3 ticked higher.
The yield on the benchmark 10-year U.S. Treasury note US10YT=RR was last down 6 basis points (bps) at 3.909%, after rising on Wednesday following a weak debt auction.
It is down 9 bps for the week after hitting its lowest since June 2023 on Monday as traders fled to safe-haven assets and ramped up their bets on Federal Reserve rate cuts. Yields move inversely to prices.
"During recent volatility episodes... the promise or pricing of aggressive Fed rate cuts has proven to be as effective as actual rate cuts, via the loosening in financial conditions," said Tony Sycamore, an analyst at trading platform IG.
Traders on Thursday expected around 110 bps of cuts from the Fed this year. Weekly U.S. jobless claims data at 1230 GMT (8.30 a.m. ET) could shift those expectations.
Crude oil was flat after rising the previous day when datashowed a bigger-than-expected drawdown in U.S. crude stockpiles.
Brent crude futures LCOc1 added 0.1% to $78.42 a barrel. It hit an eight-month low of $75.05 a barrel on Monday.
World FX rates YTD http://tmsnrt.rs/2egbfVh
Global asset performance http://tmsnrt.rs/2yaDPgn
Asian stock markets https://tmsnrt.rs/2zpUAr4
Recession indicator turns positive for first time since 2022 Recession indicator turns positive for first time since 2022 https://reut.rs/3A8fn4m
Investors bet on deeper Fed rate cuts after weak jobs data Investors bet on deeper Fed rate cuts after weak jobs data https://reut.rs/4df7NDF
Reporting by Harry Robertson in London and Kevin Buckland in Tokyo
Editing by Shri Navaratnam, Kim Coghill and Gareth Jones
To read Reuters Markets and Finance news, click on https://www.reuters.com/finance/markets For the state of play of Asian stock markets please click on: 0#.INDEXA
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.