Stocks down, dollar up as markets expect more big US rate hikes

Stock markets mostly retreated and the dollar firmed Monday as forecast-beating US jobs data fanned expectations for more large interest rate hikes from the Federal Reserve.

A rally across equity trading floors last week has given way to gloom as investors grow increasingly worried that central bank rate hikes to tame runaway prices will plunge the global economy into recession.

Adding to the stress is the upcoming corporate earnings season, which many fear will show that companies are feeling the pain of tightening monetary policies.

European and Asian equities mostly suffered Monday following heavy losses Friday on Wall Street.

Last week closed out with news that the United States created a net 263,000 jobs in September.

While that was down from August it was more than expected, highlighting the tough job Fed officials face in their battle against decades-high inflation.

With the spotlight on a US consumer price index reading later in the week, policymakers continue to take a hawkish tone, warning they will not ease up on their rate hikes even if that means causing a recession.

Elsewhere on Monday, the Moscow stock exchange plunged nearly 12 percent following multiple strikes on Ukrainian cities and a weekend explosion that partially destroyed the bridge connecting Crimea to Russia.

In foreign exchange and amid a strong dollar, the pound won little support from Britain ramping up efforts to calm markets after a heavily criticised budget.

In what was seen as co-ordinated action, the government brought forward key economic forecasts and the Bank of England boosted liquidity.

"With the pound remaining weak and (UK) government borrowing costs inching up again towards worrying levels, the UK government and the Bank of England have launched a two-pronged attempt to calm markets," noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

Oil prices meanwhile fell after the biggest weekly gain since March that followed a decision by OPEC and allied producers led by Russia to slash crude output by two million barrels per day.

The drop Monday came also on demand concerns caused by China's Covid flare-ups and more weak data out of Beijing owing to lockdowns.

- Key figures around 1030 GMT -
 

London - FTSE 100: DOWN 0.4 percent at 6,967.02 points

Frankfurt - DAX: UP 0.4 percent at 12,319.65

Paris - CAC 40: DOWN 0.4 percent at 5,842.82

EURO STOXX 50: DOWN 0.3 percent at 3,365.99

Hong Kong - Hang Seng Index: DOWN 3.0 percent at 17,216.66 (close)

Shanghai - Composite: DOWN 1.7 percent at 2,974.15 (close)

Tokyo - Nikkei 225: Closed for a holiday

New York - Dow: DOWN 2.1 percent at 29,296.79 (close)

Pound/dollar: DOWN at $1.1058 from $1.1082 on Friday

Euro/dollar: DOWN at $0.9703 from $0.9743

Euro/pound: DOWN at 87.75 pence from 87.97 pence

Dollar/yen: UP at 145.46 yen from 145.38 yen

West Texas Intermediate: DOWN 0.5 percent at $92.16 per barrel

Brent North Sea crude: DOWN 0.7 percent at $97.22 per barrel