Stocks Rise.. Dollar Falls after US Jobs Report Shock

Taarek Refaat

Official data revealed that the US economy added only 22,000 jobs in August, compared to 79,000 in July, a much lower number than analysts’ expectations of 77,000. This disappointing report has led markets to price in a larger interest rate cut, after they had previously anticipated only a quarter-point reduction.

Kathleen Brooks, Director of Research at XTB, commented: "After these negative data, expectations now point to a rate cut that could exceed 25 basis points, with calls for a 50-basis-point cut in September increasing."

While markets had initially anticipated a quarter-point rate cut, the weak job data has fueled expectations of a larger cut. Investors are now pricing in the possibility of a 50-basis-point reduction. In this regard, Brooks stated: "After these negative data, expectations now point to a rate cut that could exceed 25 basis points, with calls for a 50-basis-point cut in September."

Following the jobs report, the US dollar and Treasury bond yields fell sharply, while gold prices surged to a new record high. Investors flocked to safe-haven assets like gold amid growing concerns about the sustainability of financial debt and expectations of monetary easing.

While the weak data is seen as a positive for rate cuts and a potential relief for companies, Brooks warned that "increased concerns about the economy may later weigh on stock performance."

In Europe, the London FTSE 100 index rose, while the Frankfurt and Paris markets remained stable. In Asia, China’s CSI 300 index rebounded from sharp losses, and the Tokyo Stock Exchange saw a notable rise after President Trump signed a decision to reduce tariffs on Japanese cars to 15% from 27.5%.

On the other hand, Tesla’s stock caught attention, rising by 3.8% after its board proposed an executive compensation package for CEO Elon Musk that could exceed $1 trillion if performance targets are met.

Key Figures:

Dow Jones: +0.2% at 45,729.26 points

S&P 500: +0.4% at 6,528.08 points

NASDAQ: +0.6% at 21,838.15 points

FTSE 100 (London): +0.3% at 9,247.57 points

CAC 40 (Paris): Flat at 7,701.99 points

DAX (Frankfurt): Flat at 23,777.22 points

Nikkei (Tokyo): +1.0% at 43,018.75 (Close)

Hang Seng (Hong Kong): +1.4% at 25,417.98 (Close)

Shanghai Composite: +1.2% at 3,812.51 (Close)

Exchange Rate:

EUR/USD: 1.1719