(Bloomberg) — European and US equity markets were poised for a modest recovery Monday, after a selloff triggered by cooling US jobs data that also sent Asia’s benchmark stock index to a three-week low.
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Futures for the Standard & Poor’s 500 Index and Euro Stoxx 50 Index both advanced after the underlying gauges slid Friday following the weaker-than-forecast US payrolls numbers. The data left economists and traders at odds as to how aggressively the Federal Reserve will cut interest rates.
Shares in Asia caught up with Friday’s global losses with equities from Taiwan to Australia sliding on fears that global growth is slowing. Japan’s Nikkei 225 Stock Average dropped for a fifth day, while iron ore sank below $90 a ton for the first time since 2022.
While a September Fed rate cut is essentially a done deal, “the question of course is how many and what size the cuts will be later on,” Louis Kuijs, Asia-Pacific chief economist at S&P Global in Hong Kong, said in an interview on Bloomberg Television “There are lots of risks across the global economy,” which matters to the Fed, he said.
Even though the Fed has all but committed to reducing rates from their highest in more than two decades this month, investors have been scrutinizing economic data for clues as to the scope and pace of the reductions. Adding to headwinds is a technology sector rout. In a prelude to US easing, the European Central Bank is forecast to cut its benchmark rate when it meets Thursday.
September is proving a volatile month for markets with stocks and commodities both sliding amid concern about waning global growth. Wall Street’s fear gauge — the Cboe Volatility Index — closed at its highest in a month on Friday, after US nonfarm payrolls rose less than forecast.
Risk-off sentiment in Asia sent the MSCI Asia Pacific Index down as much as 1.8% with chipmakers Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. among the biggest drags. Japan’s Nikkei 225 Stock Average slid as much as 3.1% before trimming losses.
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