Stocks struggle as US data keeps traders wary
Stock markets struggled and the dollar mostly fell Thursday on the eve of key US jobs data that could shed light on the size of potential Federal Reserve interest-rate cuts and health of the world's biggest economy.
Global equities trading has calmed after earlier this week experiencing its most tumultuous days since early August.
News that the manufacturing sector contracted for the fifth straight month, combined with figures that showed job openings fell to their lowest level since the start of 2021, have revived worries that the US economy is not as strong as thought.
All eyes will be on Friday's US non-farm payroll figures, which could give further signals about the health of the world's biggest economy.
A big miss on labour creation in July was one of the catalysts for last month's bloodbath for stocks.
Kelvin Wong, senior analyst at traders OANDA, said "market participants are fearful that the US Federal Reserve has been late in enacting the interest rate cut cycle in the US".
With the Fed widely expected to cut rates at its meeting later this month after big drops to inflation, observers said the recent figures were making a strong case for a 50-basis-point reduction, as opposed to the 25 points largely expected.
"Fears of a burgeoning US recession continue to play out in the background as we move throughout the week", said Joshua Mahony, chief market analyst at Scope Markets.
eToro US Investment Analyst Bret Kenwell said a disappointing jobs report Friday could shift expectations towards a 50-basis-points rate cut.
"A 50-basis-point cut may seem like welcoming news for equity bulls," he said in a note to clients.
"However, if the Fed feels forced to go right to a 50-basis-point cut, it may suggest there's a bigger worry about the jobs market than previously acknowledged."
Sentiment was not improved by August private sector hiring figures released Thursday coming in below expectations, with July figures revised lower.
Payroll firm ADP said private-sector employment rose by 99,000 last month, much lower than a consensus forecast by analysts of 150,000, according to Briefing.com.
Separate unemployment data showed dips in first-time and continuing claims for jobless benefits, but still running at a higher level than in previous months.
Briefing.com analyst Patrick O'Hare said "layoff activity remains relatively tame; however, so does hiring activity, evidenced by the elevated stickiness of continuing jobless claims".
Wall Street opened mixed but could not hold onto its gains.
European stocks also ended the day lower, Frankfurt's stock market giving up its gains just before the close.
German industrial orders rose for a second consecutive month in July, official data showed Thursday, but analysts said that was not enough to brighten the outlook for struggling Europe's top economy.
Tokyo closed lower as exporters were weighed by a strengthening yen, while there were also losses in Hong Kong.
In China, a report said officials were considering cutting interest rates on more than $5 trillion of mortgages in a bid to support homeowners and ease pressure on the banking system.
- Key figures around 1530 GMT -
New York - Dow: DOWN 0.8 percent at 40,642.40 points
New York - S&P 500: DOWN 0.6 percent at 5,487.73
New York - Nasdaq Composite: DOWN 0.1 percent at 17,061.08
London - FTSE 100: DOWN 0.3 at 8,241.71 (close)
Paris - CAC 40: DOWN 0.9 percent at 7,431.96 (close)
Frankfurt - DAX: DOWN less than 0.1 percent at 18,576.50 (close)
Tokyo - Nikkei 225: DOWN 1.1 percent at 36,657.09 (close)
Hong Kong - Hang Seng Index: DOWN 0.1 percent at 17,444.30 (close)
Shanghai - Composite: UP 0.1 percent at 2,788.31 (close)
Dollar/yen: DOWN at 143.67 yen from 143.72 yen on Wednesday
Euro/dollar: UNCHANGED at $1.1082
Pound/dollar: UP at $1.3155 from $1.3147
Euro/pound: DOWN at 84.25 pence from 84.29 pence
Brent North Sea Crude: UP 0.9 percent at $73.35 per barrel
West Texas Intermediate: UP 1.0 percent at $69.90 per barrel
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T.A.Smith--RTC
