Stocks ease as investors eye economic data, rate hikes

  • MSCI global index drops for a fourth day
  • Russian bombings across Ukraine fuel nervousness
  • Markets braced for U.S. data, earnings season
  • Chips push Nasdaq lower on U.S. China restrictions

NEW YORK/LONDON, Oct 10 (Reuters) – The MSCI global index of stocks (.MIWD00000PUS) was in the red in a volatile session on Monday while the dollar gained slightly as investors braced for economic data and earnings season.

Any lingering hopes that the Federal Reserve could shift to a softer stance toward monetary policy appeared to be extinguished on Friday as the September jobs report pointed to a persistently tight labour market. read more

Oil futures sold off and Wall Street’s stock indexes were volatile, while U.S. bond markets were closed for the day for a federal holiday.

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Weighing on investor nerves was a Russian missile attack on Ukraine that killed civilians and knocked out power and heat in cites across the country in apparent revenge strikes after President Vladimir Putin said a blast on Russia’s bridge to Crimea was a terrorist attack. read more read more

U.S. investors, anxious about rising interest rates and signs of economic weakness, were cautious ahead of inflation data due out later in the week alongside the start of the third-quarter earnings season.

JPMorgan Chase & Co (JPM.N) Chief Executive Jamie Dimon told CNBC the United States and the global economy could tip into a recession by the middle of the next year. read more

Then Fed Vice Chair Lael Brainard said tighter U.S. monetary policy has begun to be felt in an economy that may be slowing faster than expected, but that the full interest rate increases still won’t be apparent for months. read more

“There’s nothing specific in Brainard’s comments that makes you say the Fed is changing its policy but there’s at least some signs that the Fed is not proceeding blindly on a rate hiking restrictive path,” said Steve Sosnick, Chief strategist at interactive brokers in Greenwich Connecticut. “Dimon’s comments definitely didn’t help. A lackluster downward market didn’t need those comments. They’ve been balanced out somewhat by Brainard.”

The Dow Jones Industrial Average (.DJI) fell 52.18 points, or 0.18%, to 29,244.61, the S&P 500 (.SPX) lost 22.87 points, or 0.63%, to 3,616.79 and the Nasdaq Composite (.IXIC) dropped 92.08 points, or 0.86%, to 10,560.32.

Nasdaq led the declines as the chip sector sold off sharply after the Biden administration published a sweeping set of export controls on Friday including a measure to cut off China from certain semiconductors made anywhere in the world with U.S. equipment. read more read more

Wall Street had already declined on Friday after the upbeat payrolls report cemented expectations for another large rate hike. read more

Four of the biggest U.S. banks are expected to kick off the earnings reporting season on Friday with large lenders expected to report a decline in profits as the economy slowed and volatile markets put the brakes on dealmaking. read more

The MSCI All-World index (.MIWD00000PUS) was last down 0.7% and poised for a fourth straight day of losses. The pan-European STOXX 600 (.STOXX) was down 0.4%, having skimmed one-week lows. Emerging market stocks (.MSCIEF) lost 1.63%.

Chicago Fed President Charles Evans also said on Monday that U.S. Fed officials are closely aligned on the need to raise the target policy rate to around 4.5% by early next year, unless data upends current projections.

Minutes of the Fed’s last policy meeting will be published this week and could offer a steer on rate-setters’ thinking about the likely path of monetary policy.

The dollar index, which measures the greenback against a basket of currencies, was recently up 0.3% while the euro was down down 0.4% to $0.9702.

The Japanese yen weakened 0.23% versus the greenback at 145.69 per dollar, while Sterling was last trading at $1.1056, down 0.25% on the day.

The Bank of England sought to ease concerns about this week’s expiry of its program designed to calm turmoil in the government bond market, announcing new safety-net measures including a doubling of the maximum size of its debt buy-backs. read more

Oil prices extended losses after settling lower as investors weighed potentially tight supply against economic storm clouds that could foreshadow a global recession and erosion of fuel demand. read more

U.S. crude settled down 1.63% at $91.13 per barrel while Brent setttled at $96.19, down 1.8%.

Gold prices fell as an elevated dollar and solidifying bets for an aggressive Fed interest rate hike pushed the non-yielding bullion to its lowest level in a week.

Spot gold dropped 1.5% to $1,669.28 an ounce. U.S. gold futures fell 1.89% to $1,668.40 an ounce.

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Reporting by Sinead Carew in New York and Amanda Cooper in London
Additional reporting by Wayne Cole in Sydney
Editing by Matthew Lewis and Alistair Bell

Our Standards: The Thomson Reuters Trust Principles.

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