European Central Bank rate hike bets pushed back to late-2020, money markets show

European Central Bank rate hike bets pushed back to late-2020, money markets show

Chinese shares were more than 4% lower on Friday after data showed exports contracting by a fifth, deepening fears for the world economy and pushing global equities to three-week troughs.

When equities post losses, the precious metal usually goes up, as investors are looking for a safe haven.

The Stoxx Europe 600 Index sank the most in a month, with carmakers and miners leading declines, while contracts on the S&P 500, Dow Jones and Nasdaq indexes dropped.

The common currency rose 0.44 percent to $1.12425, rebounding from a 20-month low of $1.11765 reached on Thursday. "The reason why market and policy makers were so surprised by the downdraft in recent data was because of the trade uncertainty".

Shanghai blue chips quickly extended early losses to be down 2.9 percent, the sharpest daily fall since October, while the dollar climbed on the yuan.

Compounding concerns was a USA payrolls report that fell well short of expectations, although other measures within the report were strong, sending mixed signals to investors. Global equities were lower after the European Central Bank stoked economic growth concerns.

The movement follows the news that the USA trade deficit widened to a 10-year high in 2018, despite President Trump's efforts to narrow it.

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"All these different variables are beginning to come together to paint a more dismal outlook for global growth", Lindsey Piegza, chief economist at Stifel Nicolaus, told Bloomberg TV from Minneapolis.

But investors do not believe that the European Central Bank will be able to meet even this target and pushed out their expectations on a rate rise even further into the future.

West Texas oil futures slipped below US$56 a barrel in NY as the weakening outlook for the global economy and rising crude stockpiles in the United States signaled that markets will remain comfortably supplied.

Chinese stocks plunged more than 4% in their worst day in five months while Japan's Nikkei closed 2% lower.

USA stocks slumped with the dollar after a report showed American hiring was the weakest in more than a year while wage gains were the fastest of the expansion. Nonfarm payrolls may have increased by 180,000, while the jobless rate fell to 3.9%, according to estimates.

The pound, meanwhile has stabilised after Prime Minister Theresa May urged the European Union to concede on changes to the Irish backstop, saying the European Union could have a "big impact on the outcome" of the "meaningful vote" on Tuesday next week.

Allianz chief economic adviser Mohamed El-Erian called it an European Central Bank flip-flop similar to the one seen by the Federal Reserve in January.

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