World shares extend losses as specter of recession looms

Shares fell in Hong Kong, Shanghai, Paris and London but rose in Frankfurt. Markets in Tokyo were closed for a holiday.

The declines followed yet another dismal end to the week on Wall Street as a strong U.S. jobs report added to worries the Federal Reserve might consider the higher-than-expected hiring data as proof the economy hasn’t slowed enough to get inflation under control. That might mean still more hefty rate hikes that could make a recession more likely.

A U.S. consumer prices report on Thursday will be one of the biggest factors for markets this week. Investors also are awaiting the latest updates on how companies are dealing with higher prices and interest rate hikes.

Germany’s DAX edged 0.1% higher to 12,289.96, while the CAC 40 in Paris slipped 0.5% to 5,837.25. Britain’s FTSE 100 declined 0.5% to 6,956.55.

The future for the S&P 500 lost 0.3% while the contract for the Dow industrials was down 0.2%.

On Friday, the S&P 500 fell 2.8%, ending with a 1.5% gain for the week, its first weekly gain in four weeks. The Dow Jones Industrial Average skidded 2.1% , while the Nasdaq tumbled 3.8%. The Russell 2000 index fell 2.9%, to 1,702.15.

Markets were closed Monday in Tokyo, Taiwan and South Korea. The Hang Seng in Hong Kong fell 3% to 17,216.66 while the Shanghai Composite index shed 1.7% to 2,974.15.. Bangkok’s SET lost 0.6% and India’s Sensex gave up 0.4%.

Chinese cities were imposing more lockdowns and travel restrictions after the number of new daily COVID-19 cases tripled during a weeklong holiday, ahead of a major Communist Party meeting in Beijing next week.

China is one of the few places still resorting to harsh measures to keep the disease from spreading. The long-ruling Communist Party is particularly concerned as it tries to present a positive image of the nation in the run-up to a once-in-five-years party congress that starts Sunday. The strict “zero-COVID” approach has taken an economic toll, particularly on small businesses and temporary workers. Many in China hope the pandemic policy will ease after the meeting.

Makers of semiconductors and chip manufacturing equipment also suffered heavy selling after the U.S. government tightened export controls to limit China’s ability to get advanced computing chips, develop and maintain supercomputers, and make advanced semiconductors.

Hangzhou Changchuan Technology and Anji Microelectronics sank 20%. Hwatsing Technology sank 17.5% and Naura Technology Group dropped 10%.

The dollar was trading at 145.43 Japanese yen from 145.34 late Friday, adding to pressure on Japan’s central bank to counter the yen’s prolonged slide by adjusting its policy of keeping its benchmark interest rate below zero to fend off deflation.

The euro slipped to 97.10 U.S. cents from 97.36 cents.

Prices have been rising in Japan, pushed higher mainly by global inflation and surging costs for oil and gas, but the Bank of Japan has stuck to its ultra-loose monetary policy while the Fed has pressed ahead with sharp rate hikes. The higher expected returns have pushed the dollar higher against the yen.

The U.S. government report showing employers hired more workers last month than economists expected might clear the way for the Fed to continue hiking interest rates aggressively, something that risks causing a recession if done too severely.

Employers added 263,000 jobs last month, less than the hiring pace of 315,000 in July, but still more than the 250,000 that economists expected.

Oil prices also have kept pressure up on inflation, surging as big oil-producing countries pledged to cut production. On Monday, the U.S. benchmark fell 92 cents to $91.72 per barrel in electronic trading on the New York Mercantile Exchange. On Friday, it logged its biggest weekly gain since March, jumping 4.7% to settle at $92.64 per barrel.

Brent crude, the pricing basis for international trading, gave up 45 cents to $97.47 a barrel. It rose 3.7% on Friday to settle at $97.92.

Beyond higher interest rates, analysts say the next hammer to hit stocks could be a potential drop in corporate profits. Companies are contending with high inflation and interest rates eating into their earnings, while the economy slows.