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European shares drop after sharp falls on Wall Street

European stocks fell in early trading on Friday as investors recoiled from the prospects for growth in the U.S. and China, the two largest economies in the world.

The Stoxx 600 regional stock index lost 0.9% at the opening, putting it on track to end the week with a decline of more than 3%. The London FTSE 100 index lost 0.8% and the German Xetra Dax fell 1%.

Bear sentiment is reflected in an overnight group meeting on Wall Street, with investors worried about the reasonable pace of U.S. interest rate hikes as an economic recession looms.

The high-tech Nasdaq Composite stock index of Wall Street Decreased by 5 percent On Thursday, when traders threw shares of major growth companies, including Tesla and Apple, whose high valuations were pressured by the US Federal Reserve that tightened monetary policy. The broad-based S&P 500 lost 3.6%.

These upheavals spread to Asia, where the FTSE Asia Pacific index of Asia Pacific stocks, excluding Japan, fell 2.9%. Chinese President Xi Jinping added to the weak sentiment by Strengthening The nation’s commitment to its zero-cube policy, which has limited tens of millions of people to their homes and slowed the economy.

The Federal Reserve raised interest rates by 0.5 percentage points on Wednesday, a move that first lifted market sentiment as it allayed fears that the central bank would raise interest rates more aggressively. However, this bullishness quickly surrendered, with investors focusing on the Fed’s option of raising lending costs for as long as it takes to fight rising consumer prices.

“We do not know how many central banks need to do to slow inflation,” said Emanuel Cao, head of European equity strategy at Barclays. “With no sense that it will peak, or start to slow down, markets will remain vague.”

Early indications of U.S. futures markets also indicated further falls coming in on Friday. Futures on the Nasdaq 100 traded down 0.7% while futures on the S&P 500 weakened 0.6%.

The U.S. Treasury Department was calm ahead of U.S. monthly job data later in the meeting as investors looked for signs that inflation – already at a 40-year high – was worsening.

“Our view is that the Fed will not be able to achieve a soft landing and a recession is coming,” said Deutsche Bank strategist Jim Reed.

The yield on the 10-year U.S. Treasury bill, which soared above 3.1 percent on Thursday, was fixed at 3.07 percent.

Economists polled by Reuters predict that the non-farm wage report for April will show that average earnings have risen more than 5%, year-on-year, for the fourth month in a row.

A strong jobs report can be taken positively, as a suggestion that the economy is strong, growth is good and we should not worry too much about the slowdown [caused by higher interest rates]Said Caroline Simmons, chief investment officer of the UK in UBS’s wealth management unit.
But if the data showed the labor market was tight, investors might conclude that “the Fed must act even faster,” she warned.

The dollar, which measures the currency against six others, added 0.3%. It has remained close to its highest level in 20 years, reflecting caution towards more risky assets that drive demand for shelter assets.

Brent crude rose for a third consecutive session, up 0.8% to just under $ 112 a barrel, amid expectations for tighter supplies as the EU prepares Hit Russia With an oil embargo in response to the war in Ukraine.

European shares drop after sharp falls on Wall Street Source link European shares drop after sharp falls on Wall Street

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