Charting the Markets: Turbulent Week Ends With U.S. Jobs Report
Global stocks halted their four-day slide after China took steps to stabilize its financial markets. The nation's central bank kept its reference rate for the yuan little changed after lowering it for eight consecutive days. State-controlled funds were also said to be buying equities after the controversial circuit-breaker system was scrapped yesterday. Chinese stocks finished a volatile session higher. Still, the Shanghai Composite Index sunk 10 percent this week, its biggest drop since August. It's the world's worst-performing global benchmark in 2016. The MSCI All-Country World Index has declined 5 percent this week, its worst performance in over four months. Some $4 trillion of value was erased from global equities in the first four trading days of 2016.
The MSCI Emerging Markets Index rebounded from a six-and-a-half year low after China stopped weakening its currency. Yuan swings tend to impact currencies and export prospects across Asia. A Bloomberg-JPMorgan Index tracking currencies across the region fell to its weakest since April 2009. This week emerging market stocks have slumped 6.5 percent, the biggest drop in almost four years.
A Bloomberg gauge tracking the dollar against a basket of 10 leading global currencies is rising for the ninth day in 10. It's just shy of the record high reached two days ago. Investors are gearing up for today's U.S. jobs report, which takes on added importance as financial markets weaken. Economists surveyed by Bloomberg forecast a 200,000 increase in nonfarm payrolls, a sign of continued growth in the world's biggest economy. While Federal Reserve officials signal four interest-rate increases are likely in 2016, the derivatives market is pricing in about only two.
Gold has fallen for the first time this year after China's measures calmed markets. The precious metal has enjoyed its best week since August, rising almost 4 percent as global equities and commodities sold off. Gold is the best performer in the Bloomberg Commodity Index, which tracks 22 materials. Gold sank 10 percent in 2015, its third straight annual drop and worst streak since 2000.
Mark Barton is a presenter on Bloomberg TV. Follow him on Twitter @markbartontv