Asian stocks fell and European markets were subdued on Friday due to strong jobs data and hawkish comments from a senior Federal Reserve official. Hong Kong’s Hang Seng index fell 1.2%, China’s CSI 300 lost 0.4%, and Japan’s Topix shed 0.9%. In Europe, the pan-European Stoxx Europe 600 index reversed earlier losses to trade up 0.1%. The annual gathering of central bankers in Jackson Hole, Wyoming, where Fed chair Jay Powell and European Central Bank president Christine Lagarde are set to speak, is causing market anxiety over the future of global interest rates.
Investor uncertainty arises from the possibility that another tightening round may take place this autumn, despite the belief that the Fed was done raising its benchmark federal funds rate. Boston Fed president Susan Collins stated that while the US central bank had approached the peak of its rate tightening cycle, there remains a real possibility that further increments will be necessary. Additionally, a lower-than-expected reading for new US jobless claims suggested that high borrowing costs have not yet affected the jobs market.
The sell-off in US government bonds continued on Friday, with yields on the benchmark 10-year US Treasuries adding 0.01 percentage points to 4.25%. The dollar also rose 0.2% against a basket of six other currencies, reaching its highest level since May. Futures contracts tracking Wall Street’s benchmark S&P 500 rose 0.1%, while those tracking the tech-focused Nasdaq 100 declined 0.1%. Overall, the markets are eager to hear from Powell and Lagarde at the central bank conference as they seek clarity on future interest rate policies.
