Stocks diverge as US data keeps traders wary

LONDON: Stock markets struggled for direction and the dollar 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 have calmed slightly since Wednesday which saw the most tumultuous day since early August following disappointing data on US factory activity and a collapse in technology firms.

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.

European shares slump on risk-off mood after US selloff

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 next month after big drops to inflation, observers said the recent figures are 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.

Frankfurt’s stock market edged up but London and Paris fell in early afternoon deals.

German industrial orders rose for a second consecutive month in July, official data showed Thursday, but analysts said it wasn’t 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 1100 GMT

London – FTSE 100: DOWN 0.1 percent at 8,260.44 points

Paris – CAC 40: DOWN 0.7 percent at 7,446.27

Frankfurt – DAX: UP 0.2 percent at 18,627.43

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)

New York – Dow: UP 0.1 percent at 40,974.97 (close)

Dollar/yen: DOWN at 143.46 yen from 143.72 yen on Wednesday

Euro/dollar: UP at $1.1104 from $1.1082

Pound/dollar: UP at $1.3167 from $1.3147

Euro/pound: UP at 84.33 pence from 84.29 pence