NEW YORK, Sept 2 ― September kicked off on a stormy note yesterday, as persistent worries about rising global interest rates and recessions hounded stocks, bonds and oil prices, and vaulted the US dollar to a 24-year high against the yen.
All eyes are now on US August nonfarm payroll data due today. Analysts expect 285,000 jobs were added last month, while unemployment hovered at 3.5 per cent. Investors may not like a strong number if it supports the basis for a continuation of aggressive rate hikes, which could further boost the US dollar.
Heavy shelling at Ukraine's giant Zaporizhzhia nuclear plant rattled nerves, too. Russia had shut its main gas pipe to Europe for maintenance, Washington ordered Nvidia Corp to stop selling high-tech chips to China, while veteran investor Jeremy Grantham warned of an “epic finale” to the stock market “superbubble” inflated by years of cheap money.
The euro tumbled 1 per cent against a surging dollar to US$0.99435 , sterling fell 0.7 per cent to US$1.15385, while the risk-sensitive Australian and New Zealand dollars drooped to their lowest levels since July. “The ECB's September 8th meeting is still a close call, but this latest data will likely be enough to tip even the centrist members towards a 75 basis point hike,” Mizuho analysts said.Overnight, Cleveland Fed President Loretta Mester said the US central bank would need to boost interest rates somewhat above 4 per cent by early next year, and hold them there in order to bring inflation back down to the Fed's goal.
Japan's Nikkei skidded 1.5 per cent and Hong Kong's Hang Seng index fell 1.8 per cent, while Chinese blue-chips ended down 0.9 per cent, having been anchored earlier in the session by hopes for more economic stimulus from Beijing.