European stocks fall for fifth day as US data disappoints

MENA Newswire News Desk: European and Asian stock markets slid on Friday as investors awaited the release of key U.S. jobs data that could significantly influence the Federal Reserve’s next move on interest rates. The anticipated payroll report is expected to provide crucial insights into the health of the U.S. labor market, which may guide future monetary policy.

The Stoxx Europe 600 index fell 0.5%, driven by declines in the energy and financial sectors. In Asia, Japan’s Topix dropped 0.9%, South Korea’s Kospi was down 1.2%, and China’s CSI 300 fell 0.8%. Major European indices followed suit, with Germany’s DAX down 0.8%, London’s FTSE 100 losing 0.5%, and France’s CAC 40 declining 0.6%. In the U.S., futures for the S&P 500 and Nasdaq 100 hinted at a turbulent session, down 0.7% and 1.3%, respectively.

Traders are closely monitoring the August payroll data, which could shed light on whether the U.S. economy has cooled more rapidly than expected. A sharper economic slowdown may push the Federal Reserve to cut interest rates more aggressively. Economists polled by Reuters forecast the addition of 160,000 jobs in August, well above the 114,000 created in July.

Federal Reserve Chair Jay Powell has stressed the importance of monitoring the labor market before making decisions on rate cuts. The central bank is expected to implement its first rate reduction from the current 5.25% to 5.5% range, but the exact size remains uncertain. Powell warned that the timing of these cuts would depend on upcoming economic data.

Weakness in the U.S. economy was further reflected in Thursday’s ADP data, which revealed that private employers added the fewest jobs in over three years. This disappointing report has intensified expectations of a rate cut of at least 0.25 percentage points. In response, the dollar softened, with the dollar index slipping 0.2%.

The Japanese yen surged 0.6% to ¥142.5, its highest point since January. U.S. Treasury yields fell, with the two-year note’s yield declining by 0.04 percentage points to 3.712%, and the 10-year bond yield dropping 0.03 percentage points to 3.7%. Oil markets saw a slight uptick as OPEC+ delayed planned production increases by two months. Brent crude rose 0.7% to $73.22, while West Texas Intermediate climbed 0.8% to $69.67.