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Stock markets fall on recession fears

Equity markets were down on Wednesday and started Thursday’s session on a negative tone after more data painted the picture of a weakening labour market in the US. Private payrolls increased by 140,000 in March, down from 261,000 in February, according to the ADP employment report. Jobs were cut particularly in the manufacturing and financial services industries. Additionally, annual pay was up 6.9% on the year in March, a smaller pay raise than in any month in the last year.

Alessandro Fezzi, LGT
Tempo di lettura
5 minuto
US flag with the word "unemployment"
© Shutterstock

The ADP report gives investors insight into the damage being done to the US labour market after a day earlier the US Labor Department’s JOLTS job report showed the number of job openings in the US fell to its lowest level in nearly 2 years in February. Investors are watching the situation closely as deterioration of the labour market is characteristic of an economy that is moving into recession.

Equity markets in New York reacted negatively to the souring jobs data. The Dow Jones Industrial shed 0.24% to end the day at 33,482.72 points and the S&P 500 lost 0.25%, closing at 4,090.38 points. On the Nasdaq, the major tech indices dropped about 1%. Nvidia was down 2.08% and AMD fell 3.45% after Japan decided to restrict chip-related exports to China.

The negative sentiment from the US spilled over to stock markets in Asia where most markets were trading at losses Thursday. Japan’s Nikkei dropped more than 1% and South Korea’s Kospi was trading down 0.7%. The Nifty 50 was trading slightly in positive territory after the country’s central bank held interest rates flat even though the market hard largely expected a 25-basis-point hike. In mainland China, the Shanghai Composite and the Shenzhen Component were both marginally positive along with Hong Kong’s Hang Seng Index. The Hang Seng Tech Index was down 0.49%.

Credit Suisse’s takeover story continued to develop on Wednesday at the annual general meeting of UBS. Chairman Colm Kelleher said it could take up to four years to integrate Credit Suisse into UBS, even without reductions to the company’s investment banking activities. UBS agreed to acquire its long-time rival last month in a government-backed deal after Credit Suisse came under pressure among broader instability in the financial sector.

Corporate news in focus: No major corporate news scheduled.

Economic data in focus: Swiss unemployment rate (07:45 CET) and US initial jobless claims (14:30 CET).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi,
Source: LGT Bank (Switzerland) Ltd.