Equity markets started a cautious trading session earlier in the week in a string of weak data in the United States (US) signaling a downside risk on the jobs report for June.
Moreover, concerns over the possibility of an economic downturn continued to drive a surge in government bonds while the dollar remained strong.
The MSCI Asia-Pacific broad index of stocks outside Japan rose 0.3% while Japan’s Nikkei added 0.9%.
Wall Street futures saw the S&P 500 and Nasdaq Composite down 0.4% after recording a slight strengthening on Friday.
Goldman Sachs analyst David J. Kostin commented that the energy bar of the S&P 500 sector saw negative returns in the first half of this year amid extreme uncertainty.
It indirectly influences the valuation that drives the market to bearish rather than the result of reduced earnings estimates.
Kostin also predicted consensus profit margins would fall leading to an EPS review of whether the economy would fall into recession or not.
Meanwhile, among the focus of investors this week was the Atlanta Federal Reserve’s earnings season report and gross national product (GDP) forecast which declined -2.1% annually for the 2nd quarter hinting at a recession.
Coupled also with the payroll report released this Friday, employment growth is forecast to slow to 270.00 in June with average earnings weakening 5.0%.
Not to forget also the minutes of the Fed’s June policy meeting on Wednesday which sounded hawkish as the committee voted to raise rates by 75 basis points.
Currency flows, meanwhile, saw the dollar retreat slightly despite still being at a 2 -decade high against a group of rivals at 105.04.
The euro remained at $ 1.0433, not far from the recent 5-year level at $ 1.0349 while the Japanese Yen dragged the dollar at 135.00 from a 24-year high of 137.01.
As for commodities, the industrial metal copper fell to a 17 -month low at 25% from its March peak.
Brent oil price fell 34 cents to $ 111.29 while US crude oil lost 23 cents to $ 108.20.
