Global stocks set for weekly loss as rate rise worries temper China reopening cheer

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Global stocks were set for their first weekly loss of the year so far, as a rally driven by hopes of China fuelling a global economic recovery was tempered by central bankers vowing to persist with rate hikes.

The all-country equity gauge was also on course to notch up a loss of around 1.4% for the week, although it remained almost 4% ahead this month following an optimistic start to 2023.

"The [European] market remains unprepared for the wave of pain that is coming from credit conditions tightening," Andreas Bruckner, European equity strategist at Bank of America, said. On Thursday, U.S. weekly jobless claims were lower than expected, pointing to a tight labour market and sending Wall Street's S&P 500 share gauge 0.8% lower.

Those comments by "usually reliable Fed dove" Brainard in particular are "compounding rate hike fears", said Tony Sycamore, an analyst at IG.The market expects the Fed's benchmark interest rate will be a touch below 5% in June, implying just over 50 basis points of additional tightening.The dollar index - which measures the U.S. currency against six peers, including the euro and yen - edged 0.14 higher to 102.17, adding a bit more distance from the 7-1/2-month low of 101.

 

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