# Global shares slide, dollar gains as rates rise on strong data
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-02-06
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Global Equity Markets Slide, Dollar Strengthens on
Meta Description: Stay updated with the latest on equity market trends, dollar rates, and the impact of the U.S. jobs report on global finance.
URL: https://financedigest.com/global-shares-slide-dollar-gains-as-rates-rise-on-strong-datahtml

By Herbert Lash and Amanda Cooper

WASHINGTON (Reuters) – Global equity markets slid and the dollar firmed on Monday after data showing a resilient U.S. jobs market suggested interest rates will stay higher for longer as central [banks face a tough battle to slow inflation](https://www.financedigest.com/boes-bailey-says-rate-setters-can-put-inflation-before-bank-worries.html "BoE’s Bailey says rate-setters can put inflation before bank worries") amid relatively strong economic growth.

The blockbuster U.S. jobs report last Friday sent investors scurrying to load up on [dollars to the detriment of emerging market assets and lower-yielding currencies like the yen](https://www.financedigest.com/yen-sinks-as-rates-outlook-diverges-nz-dollar-tumbles.html "Yen sinks as rates outlook diverges; NZ dollar tumbles").

Government bonds, which usually perform well when there is a dash for safe havens, have come under intense pressure, sending the benchmark 10-year [Treasury yield](https://www.financedigest.com/wall-st-flutters-treasury-yields-ease-as-powell-resumes-testimony.html "Wall St flutters, Treasury yields ease as Powell resumes testimony") to a one-month high of 3.64%. The [yield on Germany’s 10-year bond](https://www.financedigest.com/global-equities-gain-as-rising-bond-yields-pressure-gold.html "Global equities gain, as rising bond yields pressure gold"), the euro zone benchmark, hit 2.297%.

U.S.-listed [shares of China](https://www.financedigest.com/asia-shares-weigh-china-risks-yen-hits-6-month-high.html "Asia shares weigh China risks, yen hits 6-month high") firms fell as Sino-U.S. relations soured over a suspected Chinese spy balloon the U.S. military shot down over the Atlantic. Heavyweights Alibaba Group Holding, JD.com Inc and Pinduoduo Inc fell between 2.4% and 4.7%.

Turkey’s lira hit fresh record lows after a powerful [earthquake](https://www.financedigest.com/eus-eib-to-override-turkey-lending-ban-with-earthquake-aid.html "EU’s EIB to override Turkey lending ban with earthquake aid") struck Turkey and Syria, killing more than 2,200 people. The currency sank after [data last week showed a worrisome increase in monthly consumer inflation](https://www.financedigest.com/european-shares-rise-as-us-inflation-data-signals-end-of-rate-hike-cycle.html "European shares rise as US inflation data signals end of rate-hike cycle").

The big [driver of market](https://www.financedigest.com/d-mannose-market-opportunities-trends-drivers-challenges-forecast-by-2025-transparency-market-research.html "D-Mannose Market Opportunities, Trends, Drivers, Challenges & Forecast By 2025: Transparency Market Research") sentiment was the U.S. labor market report showing 517,000 [jobs were created](https://www.financedigest.com/italy-jan-jobless-rate-edges-up-to-7-9-with-35000-jobs-created.html "Italy Jan jobless rate edges up to 7.9%, with 35,000 jobs created") in January, with the unemployment rate falling to 3.4%, a low last seen in 1969.

This year’s rally in equities has been driven by hopes of a soft landing and [lower inflation](https://www.financedigest.com/britains-next-sees-lower-clothing-inflation-shares-dip-on-cautious-outlook.html "Britain’s Next sees lower clothing inflation, shares dip on cautious outlook"), said Antho Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan.

Investors are going to have to come to grips with the fact that rates are going to stay higher for longer and it’s still unlikely the [Fed](https://www.financedigest.com/wall-street-slips-dollar-gains-as-fed-seen-hiking-rates-in-may.html "Wall Street slips, dollar gains as Fed seen hiking rates in May") is going to cut rates this year,” Saglimbene said, as the strong labor market gives support to inflation .

Without people fearing that they’re going to lose their job, they don’t [really spend](https://www.financedigest.com/student-finances-exposed-how-do-they-really-spend-their-money.html "Student finances exposed: How do they really spend their money?") less. They don’t [change their behaviors enough to start bringing down inflation,”](https://www.financedigest.com/stocks-dollar-little-changed-as-inflation-data-sends-mixed-signals.html "Stocks, dollar little changed as inflation data sends mixed signals") he said.

MSCI’s gauge of stock performance in 47 countries slid 1.09%, while the broad pan-European STOXX 600 index lost 0.95%.

On [Wall Street](https://www.financedigest.com/wall-street-stocks-power-higher-as-treasury-yields-and-dollar-ease.html "Wall Street stocks power higher as Treasury yields and dollar ease"), the Dow Jones Industrial Average fell 0.3%, the S&P 500 lost 0.53% and the Nasdaq Composite dropped 0.65%.

The [dollar had touched a three-week high of 132.60 against the lower-yielding yen following reports the Japanese government had offered the job of central bank](https://www.financedigest.com/dollar-outshines-euro-sterling-amid-european-bank-jitters.html "Dollar outshines euro, sterling amid European bank jitters") governor to current deputy Masayoshi Amamiya, viewed as less of a monetary policy hawk than his predecessor.

The [dollar rose more than 1.2% to an almost one-month high of 132.85 yen](https://www.financedigest.com/dollar-hits-one-month-high-against-yen-as-traders-bet-on-fed-rate-hike.html "Dollar hits one-month high against yen as traders bet on Fed rate hike"). The euro was down 0.57% to $1.0731.

BALLOONING DRAMA

The drama over the balloon, which Beijing reiterated was a civilian airship that accidentally strayed into U.S. airspace, further strained already-tense relations.

Chinese equities fell on Monday, while the offshore yuan touched a one-month [low against the dollar](https://www.financedigest.com/euro-rises-after-spanish-cpi-dollar-slips-towards-8-mth-low.html "Euro rises after Spanish CPI, dollar slips towards 8-mth low"). It has fallen by almost 2% in the space of three days.

Undoubtedly, the incident is a negative headline for the market,” said Yuan Yuwei, [hedge fund](https://www.financedigest.com/what-is-a-hedge-fund.html "What Is A Hedge Fund") manager at Water Wisdom Asset Management.

The [dollar’s strength also washed through emerging markets](https://www.financedigest.com/deutsche-bank-equity-bear-market-rally-will-stretch-into-2023-dollar-weaker.html "Deutsche Bank: Equity bear market rally will stretch into 2023, dollar weaker").

The lira bore much of the brunt of the risk-off mood, falling to a record low of 18.85 to the dollar, while the Thai baht [posted its biggest one-day fall](https://www.financedigest.com/japans-factory-output-posts-biggest-fall-in-8-months-on-weak-autos-chips-sectors.html "Japan’s factory output posts biggest fall in 8 months on weak autos, chips sectors") against the U.S. currency in over 20 years.

The [earthquake is source of additional uncertainty ahead of elections in Turkey](https://www.financedigest.com/britain-boosts-aid-for-syria-turkey-after-earthquakes.html "Britain boosts aid for Syria, Turkey after earthquakes") that most likely will be held in May, said Piotr Matys, senior FX analyst at In Touch Capital Markets.

“More importantly, the U.S. payrolls published last Friday indicated that the Fed is likely to remain in a tightening mode for longer then the markets currently anticipate at a time when President Erdogan strongly indicated he expects the Turkish central bank to [cut interest rates,”](https://www.financedigest.com/interest-rates-are-cut-to-an-all-time-low-what-will-this-mean-for-small-businesses.html "Interest rates are cut to an all-time low. What will this mean for small businesses?") Matys said.

[CENTRAL BANKER](https://www.financedigest.com/inflation-fighting-central-bankers-air-climate-role-doubts.html "Inflation fighting central bankers air climate role doubts") DELUGE

A host of [Fed officials are set to speak this week](https://www.financedigest.com/wall-st-seen-steady-ahead-of-inflation-data-fed-later-in-week.html "Wall St seen steady ahead of inflation data, Fed later in week"), led by Chair Jerome Powell on Tuesday, and the tone could be hawkish. [European Central Bank](https://www.financedigest.com/ecbs-villeroy-rate-hike-signals-strong-confidence-in-european-banks.html "ECB’s Villeroy: rate hike signals strong confidence in European banks") and Bank of England policymakers will also be making appearances.

Futures are almost fully [priced for a quarter](https://www.financedigest.com/live-near-the-richest-street-in-essex-for-a-quarter-of-the-price.html "Live Near The Richest Street In Essex For A Quarter Of The Price") point U.S. rate [rise in March](https://www.financedigest.com/uk-new-car-sales-rise-17-in-march-best-ever-month-for-evs.html "UK new car sales rise 17% in March; best ever month for EVs"), and likely another in May, leaving the peak now at 5.11% in June from less than 4.9% before the jobs data.

Oil prices edged lower after rising more than $1 as a stronger dollar and [fears that slower growth in major economies](https://www.financedigest.com/uk-economy-set-for-smaller-hit-in-2023-than-previously-feared-imf.html "UK economy set for smaller hit in 2023 than previously feared – IMF") could curb demand outweighed supply concerns.

U.S. crude fell 1.14% to $72.55 per barrel and Brent was at $79.36, down 0.73% on the day.

(Reporting by Herbert Lash, Additional reporting by Bansari Mayur in Bangalore, Karin Stohecker in London and Wayne Cole in Sydney; Editing by Shri Navaratnam, John Stonestreet, Chizu Nomiyama and Andrea Ricci)


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