Fed rate hike talk weighs on global stocks

AP News
Posted: Mar 09, 2015 7:58 AM
Fed rate hike talk weighs on global stocks

LONDON (AP) — Global stocks fell Monday as last week's strong U.S. jobs data continued to reverberate around markets, with traders thinking it's now more likely that the Federal Reserve will start to raise interest rates in the summer.

KEEPING SCORE: In Europe, France's CAC-40 fell 0.2 to 4,931 while Germany's DAX dropped 0.2 percent to 11,529. The FTSE 100 index of leading British shares was 0.7 percent lower at 6,864. Wall Street was poised for modest losses at the bell, with Dow futures and the broader S&P 500 futures 0.1 percent lower.

FED TALK DOMINATES: The main focus in the markets was last Friday's strong U.S. jobs data for February showing a forecast-busting 295,000 increase in nonfarm payrolls, which ratcheted up expectations that the Fed will raise interest rates as soon as June. The Fed has held interest rates close to zero for more than six years to stimulate growth following the 2008 global crisis.

ANALYST TAKE: "European risk assets took their cue from the softening price action seen on Friday by U.S. investors this morning, as last week's jobs number unexpectedly pulled forward the market's expectation of a rate hike by the Fed," said David White, a trader at Spreadex.

ECB STARTS QE: Of interest too is the start of the European Central Bank's 60 billion-euro ($65 billion) per month bond-buying program. The bank hopes the program will stimulate the eurozone economy and get inflation back to the target of just below 2 percent. At present, consumer prices in the 19-country single currency bloc are falling at an annual rate of 0.3 percent.

EURO REBOUNDS: The divergence between the Fed and the ECB is one of the main reasons why the euro sunk Friday to $1.0823, its lowest level in over 12 years. On Monday, it recouped some ground, trading 0.3 percent higher at $1.0873.

ASIA'S DAY: Tokyo's Nikkei 225 fell 1 percent to 18,790.55 points and Seoul's Kospi shed 1 percent to 1,992.82. Hong Kong's Hang Seng declined 0.2 percent to 24,123.05. The Shanghai Composite Index was the only major index to buck the regional trend, adding 1.9 percent to 3,302.41 after China's February exports were stronger than expected.

CHINESE TRADE: Exports jumped 48.3 percent in February over a year earlier, rebounding from January's 3.3 percent decline and bringing total growth so far this year to 15 percent. Imports shrank for a second month, declining 20.5 percent and bringing the total contraction this year to 20.2 percent. The trade minister said Saturday that weakness was expected in February trade but expressed confidence China can hit the government's target of 6 percent growth this year in total imports and exports.

ENERGY: Benchmark U.S. crude added 3 cents to $49.64 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, lost 23 cents to $59.40 per barrel in London.