Global stock markets are struggling as the US labour market shows signs of slowing down and a bigger-than-expected rate hike is pushing up the kiwi dollar. Despite holidays in China and Hong Kong, the MSCI’s Asia-Pacific index excluding Japan remained mostly flat, with Japan’s Nikkei falling 1%.
Wall Street indexes ended a four-day winning streak on Tuesday, with all three major indexes dropping. This, coupled with data showing job openings in the US at its lowest level in nearly two years in February, pushed investors to dial down rate expectations. Two-year treasury yields, which closely track short-term rate expectations, fell sharply by nearly 15 basis points and the dollar followed suit and dropped to a two-month low.
JPMorgan Chase & Co chief executive, Jamie Dimon, in a letter to shareholders said, “The market’s odds of a recession have increased” and “The current crisis is not yet over” warning that the confidence fears that have rattled banks have not dissipated yet.
US interest rate futures have rallied over the last few weeks, due to traders speculating that in an attempt to tighten lending, banks will cut back on their loans, leading the need for monetary policymakers to follow suit. Two-year yields at 3.8459% and 10-year yields at 3.3517% have both fallen below the top of the Fed funds rate window, which is at 5%. Gold hit a one-year high above $2,000 an ounce overnight as it pays no yield.
In contrast to the US, other central banks have indicated that they will remain on track to tame inflation. This has kept the pressure on the dollar with FX strategists expecting it to remain low throughout the year. The Reserve Bank of New Zealand surprised traders with a 50 basis point hike on Wednesday and sent the kiwi up 1%.
Data from Japan has indicated that services activity grew at its fastest pace in more than nine years and that factory output, though weak, is still strong in comparison to other regions. In China, investment inflows for the first quarter hit a record high and with expectations of more policy support, GDP saw a slight growth.
Oil prices surged on Monday after news of OPEC+ production cuts, with Brent crude futures staying steady at $85.42 a barrel.
JPMorgan Chase & Co (JPMC) is an American multinational investment bank and financial services holding company. Headquartered in New York City, it is the largest bank in the United States by assets and the sixth-largest bank in the world in terms of total assets. JPMC offers a broad range of finance services, including Investment Banking, Asset Management, Prime Services, and Investment Research.
Jamie Dimon is an American business executive who is Chairman and CEO of JPMorgan Chase, the largest of the big four American banks. He is the sixth-highest paid CEO in the US and the highest paid CEO within the financial services industry. He is also a member of the Business Roundtable and the Business Council. Before joining JPMorgan Chase in 2000, Dimon held positions at Companies such as Citigroup, Commercial Credit, and Smith Barney.