US stocks market participants keep a close eye on the American job market's performance
Investors are keeping a close eye on the US Federal Reserve as signs of a weakening labor market prompt expectations for an easing of monetary policy. Despite this, Europe's stock markets have shown resilience.
The US added only 54,000 jobs in August, a significant drop from the initially reported 104,000 in July and far below the economists' expectation of 65,000. This weak jobs report has fueled speculation that the Fed will cut interest rates at its meeting on September 16 and 17. Market participants anticipate a 25 basis point cut, with some even expecting a faster pace of rate cuts if the labor market data continues to disappoint.
However, Europe's markets have remained relatively stable. The Euro Stoxx 50 was in positive territory during the session, and the German Dax closed at 23,770 points with a gain of 0.7%. Bond markets also showed signs of calmness, with yields of major Eurozone issuers decreasing. The ten-year Bund yield was at 2.71%, down from 2.74% the previous day.
Japan successfully placed its 30-year bond during an auction, and Spain and France offered long-dated bonds that received strong demand. Despite this, bond yields in the Eurozone remained low, indicating a continued appetite for safe-haven assets.
Elsewhere, travel and tourism stocks across Europe faced pressure. British budget airline Jet2 experienced a share price plunge after issuing a more cautious outlook for the year. Shares of Jet2 fell by nearly a quarter in London at one point.
In other news, the German Bundesbank announced a new survey on long-term bonds, scheduled for Monday. Meanwhile, Italian holding company MFE MediaForEurope (MFE) now holds a clear majority in ProSiebenSat.1, allowing it to proceed with the planned restructuring of the TV group. Following the end of the takeover offer to shareholders, including the extended deadline, MFE holds a 75.61% stake. ProSiebenSat.1 shares were in positive territory during the session.
Jochen Stanzl, Chief Market Analyst at CMC Markets, warned that if the labor market data turns out too strong and inflation proves to be too hot, the Fed may not be able to shift into a faster pace of rate cuts. The prospect of decreasing US interest rates has provided some support to Europe's stock markets, but uncertainty remains as investors watch for further developments in the US labor market.
