GLOBAL MARKETS-Recession angst triggers worst day of year for European stocks

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Weak US data is weighing on stock markets

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Nikkei falls, yen gradually eases after BOJ

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Aussie missed jobs

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Lagarde, Fed speakers at attention

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Chart: World FX Rates http://tmsnrt.rs/2egbfVh

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By Marc Jones and Tom Westbrook

LONDON/SINGAPORE, Jan 19 (Reuters) – Stocks and oil prices fell on Thursday after weak U.S. consumer data rekindled concerns about a global recession, while the Japanese yen rebounded as traders shrugged off fresh criticism. concluded that the Bank of Japan will soon tighten policy.

A 1.4% drop in European stocks looked set to be their toughest day of the year so far and an even worse session for Toyko left the world’s major indexes facing their first three-day loss since mid-December.

Wall Street futures were also down 0.5%, while the yield on the 10-year US Treasury, which tends to lower global borrowing costs and fall when bond prices rise, was the lowest since September.

Oil prices fell back about 1% after rising 10% this year, and the industrial metal copper fell from a six-month high as resource-hungry China eased strict COVID-19 restrictions.

“We really think that the recession and the corporate earnings season that we’re in at the beginning of…

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“Retail sales data from the US and places like the UK will be a bit weaker for a while,” he added. “But never underestimate US consumers, that’s the rule of thumb for import investing. Let’s see a few more months (of data).”

In currency markets, the yen rose 0.7 percent to $127.95, paring some of the previous day’s decline, while, surprising markets, the Bank of Japan (BOJ) tightened its approach to interest rates. very few left.

The BOJ has been pursuing super-easy policy settings for decades to generate inflation and growth, but there are doubts it can sustain that, and traders are selling Japanese government bonds and buying the yen to bet on a reversal.

“There is intense speculation in the market now that the January (BOJ) meeting has taken place without any changes … that we will see something in March,” said Shafali Sachdev, head of FX, fixed income and commodities in Asia at BNP Paribas Wealth Management. in Singapore.

April was another possibility, she added, because then the BOJ would have a new governor. “My guess would be that more speculators will be looking at these meetings to build positions.”

However, speculators in the bond market gave some feedback to the BOJ. After four days of big BOJ spending that lifted the 10-year, back within the target range of 0.5% either side of zero, the yield was at 0.41% on Thursday.

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SERIAL LINES

Many things were done in Europe.

European Central Bank President Christine Lagarde told the Davos meeting of the World Economic Forum that the bank would stay on course with a rate hike, slightly raising the euro zone’s debt ratio.

Minutes from last month’s ECB meeting were also brief, although Dutch ECB policymaker Klaas Knot, a well-known figure, also suggested that the market should take a serious look at the direction of rates on several key points. increase in take.

The Norwegian krone was higher as its central bank kept interest rates at 2.75% but said they were likely to rise in March, while the New Zealand dollar fell 1% after the surprise resignation. of Prime Minister Jacinda Ardern who said. it has “no more in the tank”.

S&P 500 futures were down 0.75 percent as the U.S. open closed and was close to breaking below its 50-day moving average.

On Wednesday, the S&P 500 lost 1.6% after data showed U.S. manufacturing output fell last month and retail sales fell by the most in a year.

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Microsoft’s announcement of 10,000 layoffs and scathing comments from Cleveland Fed president Loretta Mester and president of St.

Fed officials Lael Brainard and John Williams were scheduled to make public appearances later. Netflix, American Airlines and Procter & Gamble report results, while housing start numbers, weekly jobless claims and the Philadelphia Fed Productivity Survey will add more color to the health of the US economy.

“Decreases in consumer spending and industrial production add to the issue of the economy slowing down and heading into recession in 2023, and the soft story that has dominated markets since January is returning,” the head of the market economy said. of National Australia Bank, Tapas Strickland said. .

The dollar slipped into the red after its overnight high as New York trade showed up. The Australian dollar was still down 0.75 percent after the data showed

unexpected fall

in Australian employment last month, but ECB speakers had returned the euro to positive territory at $1.0822.

(Reporting by Marc Jones; Editing by John Stonestreet and Alex Richardson)

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