By Harry Robertson
LONDON (Reuters) – European shares fell and U.S. stock futures fell on Thursday after choppy sessions in Asia and on Wall Street as investors struggled to find their footing in a turbulent week for markets.
The yen and U.S. bonds rose as traders awaited weekly U.S. jobless claims data, which took on added significance after weak employment figures helped spark Monday’s market rout.
The continent-wide European stock market index fell 0.9% after rising 1.5% on Wednesday. The main index fell 0.6% and the FTSE 100 index fell 1%.
U.S. crude futures fell 0.2%. The index fell 0.8% the day before, after giving up a 1.7% gain in morning trading.
“When you have a volatility shock like this, and you have a degree of relaxation in certain situations, you are very vulnerable to sudden reversals as well as a degree of unease as the adjustment continues,” said Eric Nelson, macro strategist at Wells Fargo.
“I’d be surprised if we came back to everything being okay.”
The US stock index swung from an early loss of 2.5% to a gain of 0.8% before closing down 0.7%.
Weak US jobs data last week, coupled with a strong yen and concerns about an AI bubble, sent stocks tumbling.
The S&P 500 fell 3% on Monday and is sitting down 2.8% for the week — though it is still up about 9% for the year.
Yen jumps
The Japanese yen rose slightly on Thursday, adding to investor concerns, after falling about 1.6% on Wednesday. The dollar was last down 0.3% at 146.26 yen.
The yen has risen 11 percent since hitting a 38-year low in July, helped by government intervention, a surprise interest rate hike by the Bank of Japan and a slowdown in U.S. jobs that has weighed on the dollar.
The rally forced investors to largely unwind carry trades, where they borrow cheaply in Japan to buy dollars and other currencies to invest in higher-yielding assets, and helped trigger a 12% drop in Japanese stocks on Monday.
Bank of Japan Deputy Governor Shinichi Uchida on Wednesday played down the chances of another interest rate hike in the near term, but minutes released on Thursday revealed a hawkish bias among board members.
The pound was little changed on Thursday at 103.12, after hitting an eight-month low of 102.69 on Monday. The euro and sterling were also steady.
The yield on the benchmark 10-year U.S. Treasury note fell 6 basis points to 3.909%, after rising on Wednesday following a weak debt auction.
Gold prices fell about 9 basis points during the week after hitting their lowest since June 2023 on Monday as traders fled to safe-haven assets and increased their bets on a rate cut by the Federal Reserve. Yields are moving in the opposite direction to prices.
“I think the interest rate market (government bonds) has overtaken the equity market more,” said Karl Hamer, global head of asset allocation at SEB.
Hammer said markets were expecting big rate cuts from central banks. “When I look at most of the growth measures we track, I’m not overly concerned,” he added.
Traders on Thursday were expecting the Fed to cut interest rates by about 110 basis points this year. U.S. weekly jobless claims data due at 1230 GMT (8:30 a.m. ET) could change that outlook.
Crude oil prices fell slightly after rising the previous day when data showed a larger-than-expected draw in inventories.
U.S. crude futures fell 0.3 percent to $78.06 a barrel. They hit an eight-month low of $75.05 a barrel on Monday.