European stocks set to suffer weekly loss as global economic outlook deteriorates

LONDON, Sept 16 (Reuters) – European stocks fell on Friday and Wall Street was expected to open lower as investors braced for a U.S. rate hike next week amid new warning signs of a global economic slowdown.

The World Bank’s chief economist said on Thursday he was worried about a period of low growth and high inflation in the global economy. The International Monetary Fund said downside risks continue to dominate the economic outlook, but it was too early to tell whether there will be a broad-based global recession. Read more

Wall Street sold on Thursday after U.S. economic data gave the Federal Reserve little reason to ease its aggressive rate hike stance. Read more

The pessimistic tone continued during Asian trading, with data showing that China’s property sector contracted further last month. Read more

In the UK, retail sales fell more than expected, another sign that the economy is slipping into recession as the cost of living crisis squeezes disposable household spending. Read more

As of 10:32 GMT, the MSCI World Stock Index, which tracks stocks from 47 countries, was down 0.4% on the day and set for its fourth consecutive day of losses. (.MIWD00000PUS)

The European STOXX 600 fell 1% (.STOXX), forecast for a weekly decline of 2.3%. London’s FTSE 100 (.FTSE) rose 0.2% and Germany’s DAX fell 1.5% (.GDAXI). Read more

Wall Street futures were down, with the S&P 500 e-minis trading near two-month lows. Read more

“We are now seeing data confirming that the economy is indeed slowing down,” said Axel Rudolph, market analyst at IG Group.

“I expect equities to fall back below their March lows. If you’re in an environment where central banks are aggressively raising rates, that has always led to bear markets.”

Markets were pricing in a 75% chance of a 75 basis point rate hike and a 25% chance of 100 basis points when the Fed meets next Wednesday. The Bank of Japan and the Bank of England will also meet next week.

Joachim Fels, managing director and global economic adviser at PIMCO, said in a note that although he expects a “relatively shallow” recession, “it is unlikely to be followed by a strong recovery. of V because persistent inflation will prevent central banks from easing policy”. in a significant way anytime soon.”

The US dollar index rose 0.1% to 109.95, still close to a 20-year high, and slightly lower against the yen at 143.23.

The yen could rush to three-decade lows before the end of the year, market analysts and fund managers say. Read more

Dollar strength pushed the offshore Chinese yuan past the 7 to the dollar level for the first time in nearly two years. Read more

The pound weakened to a new 37-year low against the US dollar. Read more

The Euro was a bit lower at $0.9976. German two-year bond yields hit a new 11-year high after the vice president of the European Central Bank said an economic slowdown in the euro zone would not be enough to control inflation and the bank should continue to raise interest rates. Read more

Germany’s benchmark 10-year bond rose 6 basis points on the day to 1.787% – after hitting its highest level since mid-June in early trading.

Oil prices rose slightly but were on track for a weekly decline amid fears of reduced demand. Read more

Reporting by Elizabeth Howcroft; Editing by Sherry Jacob-Phillips and Toby Chopra

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