In This Article:
* U.S. stock futures down 0.29%
* European stocks heading for worst week in 2 months
* MSCI Asia ex-Japan index drops 2.69%
* Oil jumps 2%
*
By Carolyn Cohn
LONDON, May 6 (Reuters) - U.S. stock futures were indicating a lower open on Friday following a slide in the previous session on U.S. rate hike expectations, though the rate outlook briefly drove the dollar to its highest in 20 years.
Asian stocks fell on worries about the hit to growth from China's zero-COVID policy.
The U.S. currency was finding favour after the Federal Reserve raised rates by 50 basis points this week. The market is pricing in a more than 90% chance of a 75 bps hike in June, according to Refinitiv data.
U.S. payrolls data due later on Friday will help traders gauge the strength of the U.S. economy. Economists polled by Reuters predicted the data would show the United States created 391,000 new jobs in April, versus 431,000 a month earlier.
"The trend is still for a strong and very tight labour market, which is feeding into wage increases and is an issue for inflation longer term," said Gergely Majoros, a member of the investment committee at asset manager Carmignac. This made it hard for the Fed to keep prices stable, he added.
"Job creation is still too hot for the Fed to achieve its mandate."
U.S. stock index futures dropped 0.29% after the Dow Jones Industrial Average and the S&P 500 both slid more than 3% overnight, and the Nasdaq Composite shed 4.99% in its biggest single-day plunge since June 2020.
European stocks fell 1.14% to their lowest since mid-March and were heading towards their worst week in two months. Britain's FTSE dropped 0.73%.
MSCI's world equity index fell 0.35%, approaching its lowest since Feb 2021.
The dollar hit a 20-year high of 104.06 against an index of currencies before trimming gains.
It rose 0.17% to 130.34 yen, also close to its highest in 20 years.
The euro rose 0.45% to $1.0584, however.
The European Central Bank should raise its deposit rate back into positive territory this year, French central bank chief Francois Villeroy de Galhau said on Friday, comments that point to his support for at least three rate hikes in 2022.
Sterling fell to its lowest against the dollar in nearly two years after dropping 2.2% on Thursday.
The Bank of England raised rates by 25 basis points on Thursday as expected, but two policy makers expressed caution about rushing into future rate hikes.
Bond yields are also rising on expectations of a fast pace of rate hikes. The yield on U.S. 10-year notes was last 3.0828% after crossing 3.1% overnight for the first time since November 2018.