Global Markets Open Mixed as Weaker US Jobs Data Boosts Rate-Cut Hopes
By Staff, Agencies
Global financial markets began the new week on a mixed note as signs of a cooling US labor market eased concerns about aggressive Federal Reserve monetary policy and encouraged risk appetite.
US nonfarm payrolls fell by 23,000 in July, sharply missing expectations for an increase of 85,000. Private-sector employment rose by 44,000, also below forecasts.
The weaker employment figures increased expectations that the Federal Reserve could adopt a more dovish approach. Money market pricing put the probability of the Fed keeping interest rates unchanged in September at 53%, while the likelihood of a rate hike was estimated at 71% for October and 83% for December.
Analysts said the decline in employment, particularly in the services sector, could partly reflect the conclusion of the FIFA World Cup in July.
Markets are now closely watching US inflation data due later this week. A further slowdown in inflation could strengthen expectations for a less restrictive Fed policy, while potentially increasing market volatility ahead of and following the release.
Geopolitical developments also continued to influence investor sentiment. Although military tensions were relatively subdued at the start of the week, the absence of a lasting peace agreement in the Middle East remained a source of uncertainty.
Washington is continuing to assess the economic impact of the conflict while new military operations against Iran remain on hold. US President Donald Trump said the White House was pursuing a strategy focused on managing relations with Tehran amid ongoing negotiations, which he described as being at a preliminary stage.
Trump also pointed to Iran's deteriorating economic situation, saying the country was facing financial difficulties and had limited resources to support its military. US restrictions have added to the economic pressure facing Tehran.
Traffic through the Strait of Hormuz recovered somewhat last week but remained well below pre-war levels, keeping concerns over oil supplies elevated and supporting higher energy prices.
In US markets, the 10-year Treasury yield rose modestly to 4.66%, while the US Dollar Index opened 0.2% higher at 99.7. Gold declined 0.1% to $4,336 an ounce after gaining during the previous week.
Brent crude for October delivery rose 0.4% to $83.90 a barrel.
European markets also showed mixed performance after ending the previous week higher. Investors were looking ahead to German inflation data on Wednesday, UK economic growth and industrial production figures on Thursday, and eurozone growth data on Friday.
Meanwhile, Ukrainian President Volodymyr Zelenskyy said Kyiv would receive missiles for the Patriot air-defense system from the United States each month.
Asian markets ended Monday largely higher, with positive sentiment from US and European equities carrying into the region. A recovery in semiconductor stocks provided additional support, although uncertainty surrounding the Middle East continued to weigh on investor confidence.
China's annual inflation rate rose 0.5% in July, below expectations, while producer prices fell 3.5% over the same period. Analysts warned that the figures could signal a renewed return to deflationary pressures in the Chinese economy, particularly as geopolitical tensions in the Middle East continue to push up energy prices.
Japan's current account balance recorded a $584.5 million deficit in June, marking the first monthly deficit in roughly a year and a half and coming in below expectations.
By the end of Monday's trading session, Japan's Nikkei 225 had risen 2%, South Korea's Kospi gained 0.8%, Hong Kong's Hang Seng advanced 0.6%, and China's Shanghai Composite edged up 0.1%.
