Global Markets Waver Amid Investor Anxiety Over US Growth and Earnings

Global stocks ended a tumultuous week lower amid investor concerns over U.S. growth and mixed earnings, particularly in the tech sector. Safe havens like gold, government bonds, and certain currencies gained, while European and U.S. indices fell. Anticipation builds for crucial U.S. non-farm payrolls data and potential Federal Reserve interest rate cuts.

Global stocks concluded a volatile week in decline as investor concerns about U.S. economic growth and underwhelming earnings significantly impacted tech stocks. Meanwhile, safe havens such as gold, government bonds, and select currencies saw gains.

The selloff originated in Asia, where Japan's Nikkei share index plummeted 5.8%, the worst drop since the March 2020 COVID-19 crisis. MSCI's broad gauge of global stocks declined by 0.8%. In Europe, the main Stoxx share index fell by 1.6% early on, with futures indicating that Wall Street's S&P 500 would open 1% lower.

Disappointing U.S. factory data released on Thursday sparked fears that the Federal Reserve's sustained high borrowing costs could be harming the economy. European tech stocks also dropped to their lowest level in over six months, with the STOXX Europe 600 technology index down by 3.6%, driven by poor earnings reports from semiconductor giants like Intel.

The tech-heavy U.S. Nasdaq 100 was expected to open 1.7% lower in New York. Investors anticipate a shift in focus from major central banks, moving away from inflation control towards supporting economies and job markets hit by tightening monetary policies.

Anticipation is high for the U.S. non-farm payrolls report, with the money market predicting a 31% chance that the Fed will cut rates by 50 basis points next month. Economists forecast that U.S. employers added 175,000 new hires in July, down from June's 206,000. SEB US economist Elisabet Kopelman warned of potential quick and severe labor market downturns historically linked to recessions.

The 10-year Treasury yield fell 3 basis points to 3.978% on Friday, while the two-year yield touched its lowest point since May 2023, reflecting shifting interest rate expectations. In Europe, the 10-year German bund yield fell by 3 basis points to 2.248%. Fidelity International fixed income manager Shamil Gohil noted that investors would closely watch the employment rate as a possible recession signal.

Currency markets saw the yen and Swiss franc strengthen, while the British pound faced a weekly drop as traders anticipated further rate cuts by the Bank of England.

Commodities reflected global growth concerns, with gold rising 0.6% to $2,462 an ounce and Brent crude, despite gaining to $80.28 a barrel, heading for its fourth weekly loss.

(With inputs from agencies.)