Stocks rise, dollar drops as US jobs data boosts rate cut hopes ~ EconomyLens.com

London (AFP) – Stocks rose and the dollar slid Friday as a sharp slowdown in US hiring cemented expectations that the US Federal Reserve will resume cutting interest rates later this month. Wall Street’s three main indices opened in positive territory after official data showed the US economy added 22,000 jobs last month, down from July’s 79,000 figure. Analysts had expected the figures to confirm a cooled labour market as companies pull back on hiring amid ongoing uncertainty over President Donald Trump’s tariffs. But the numbers were well below the 77,000 jobs they had expected.

Ahead of the figures, the market had already largely priced in a cut of a quarter percentage point, or 25 basis points, by the Federal Reserve at its monetary policy meeting later this month. “In the aftermath of this report and the ugly payrolls number, the Fed Fund Futures market is now pricing in more than 25 basis points rate cut for this month, and calls are likely to grow for a 50 basis points cut in September,” said Kathleen Brooks, research director at trading group XTB.

The report sent the dollar and US Treasury yields lower, while gold hit a new record high. Gold has benefitted as a refuge for investors turning away from long-term bonds, which have been hit by concerns about debt sustainability as well as expectations of lower interest rates. Gloomy economic data has recently supported stocks as investors see it as boosting chances the Fed will cut interest rates, which is positive for businesses. However, “as concerns about the economy grow, we could see stocks struggle,” warned Brooks.

London’s stock market was higher in afternoon trading but Frankfurt and Paris were flat. In Asia, China’s blue-chip CSI 300 benchmark recovered after falling 2.1 percent the previous day—the largest drop since early April when Trump’s tariff threats caused the index to drop more than seven percent in one day. An August rally in Chinese stocks, fuelled by surging shares in semiconductor firms, ground to a halt this week, with Cambricon Technologies tumbling 14 percent Thursday on reports of a regulatory clampdown. Tokyo also climbed after Trump signed an order to lower tariffs on Japanese autos to 15 percent from 27.5 percent.

Oil prices extended losses in anticipation of excess supply in the coming months as OPEC+ nations, which include Saudi Arabia and Russia, are expected to further unwind production cuts this weekend. Oil has tumbled 12 percent this year as global producers outside OPEC+ ramp up and tariffs curb demand. Shares in Tesla climbed 3.8 percent after the board of the US electric vehicle maker proposed a pay package for CEO Elon Musk that could top $1 trillion if certain performance milestones are met.