U.S., European Stocks Dip on Fed Rate Expectations, Volatile Sentiment
US and European stocks were down as investors’ sentiment toward risky assets weakened amid unresolved geopolitical conflicts. Oil prices remain elevated in the global commodity markets, and on Wall Street, elevated US Treasury yields continue to fuel bearish sentiment.
Global equities markets reacted negatively to stronger US payrolls, reinforcing expectations of tighter monetary policy and lifting yields, weighing on risky assets into the new week.
Friday’s session saw the S&P 500 lose 0.38%, the NASDAQ fall 0.29%, and the Dow Jones shed 0.51%, as credit-sensitive sectors retreated, First National Bank (FNB) said in a brief on Monday.
Europe offered little directional conviction, with the FTSE 100 ending the week flat while the Euro Stoxx 50 added 0.16%. Asian trade is diverging this morning as traders digest recent reports of military strikes in the Strait of Hormuz over the weekend.
The Hang Seng Index has fallen 0.97% so far, as financials, technology, and energy minerals retreat amid renewed Federal Reserve rate-hike concerns, while investors await China’s August trade data, due out tomorrow. By contrast, the Nikkei 225 has added 1.89%, while the ASX 200 is trading flat.
The JSE is set for a softer open this morning as global futures carry a modest negative bias and Asian markets are trading mixed, despite gains in mainland China. Hong Kong’s retreat is also tempering sentiment, with Tencent down 0.77%, providing a negative read through for Naspers and Prosus.
On the resource side, a 0.08% rise in Australia’s mining index lends some support t to local miners, although softer commodity prices and concern over further Federal Reserve tightening may limit the benefit.
Brent crude is firmer, while weaker gold and platinum prices point to pressure on PGM counters and precious metals miners.
The Johannesburg Stock Exchange (JSE) was little changed at the closing bell on Friday, with the All-Share Index adding 0.03% as gains in Financials (+0.69%) offset weakness in Resources (-0.43%) and Industrials (-0.12%).
Market sentiment was supported by South African Reserve Bank Governor Lesetja Kganyago’s comments that policymakers could take a measured approach to inflation shocks.
Investors were also weighed down by higher oil prices after Brent crude rose more than 7% for the week amid concerns over potential supply disruptions linked to renewed tensions involving Iran and the US. Nigeria’s Foreign Reserves Top $54bn, Extend Import Cover
