Global Equity Index Declines Ahead of US Jobs Data; Oil Stabilizes – Reuters

By Sinéad Carew and Marc Jones

NEW YORK/LONDON – The MSCI global equities index dipped slightly on Thursday as investors processed mixed economic indicators and awaited an important U.S. jobs report scheduled for Friday. Oil prices remained near 14-month lows due to concerns about demand, despite some reductions in inventories.

U.S. Treasury yields declined, with two-year yields hitting a 15-month low, following the release of ADP’s private sector jobs data for August, which showed fewer jobs were added than expected. This data indicated that private employers in the U.S. hired the least number of workers in three and a half years, with the previous month’s figures also revised downward, suggesting a potential slowdown in the labor market.

This disappointing data added to investor anxiety as they awaited the forthcoming non-farm payroll report expected to shed light on the speed at which the U.S. Federal Reserve may lower interest rates in its September meeting. Economists forecast around 160,000 new jobs for August, an increase from 114,000 in July.

Speculation about the Fed’s upcoming policy changes has increased, with the probability that they might initiate a significant easing cycle rising to 41% from 34% a week ago. However, traders still see about a 59% likelihood that any rate cut will be limited to a quarter of a percentage point.

Earlier in the week, Wall Street experienced its most significant one-day losses in nearly a month due to heightened anxiety surrounding the economy. According to Michael James, managing director of equity trading at Wedbush Securities, the market’s Tuesday decline affected investor sentiment, contributing to a more cautious trading environment.

While the day’s data indicated stable activity in the U.S. services sector, with the Institute for Supply Management’s non-manufacturing purchasing managers index showing a slight increase, this did little to bolster stock indexes, which faced declines as the trading session progressed.

On Wall Street, the Dow Jones Industrial Average fell by 219.22 points, or 0.54%, closing at 40,755.75. The S&P 500 decreased by 16.66 points, or 0.30%, to 5,503.41, while the Nasdaq Composite rose by 43.37 points, or 0.25%, to 17,127.66.

MSCI’s global stock gauge dropped by 1.79 points, or 0.22%, marking its fourth consecutive day of declines. Earlier, European markets also closed lower.

In currency markets, the dollar weakened slightly as investors braced for the upcoming payroll report. The U.S. dollar index, which tracks the currency against a basket of others, fell by 0.17% to 101.09. The euro advanced by 0.22%, reaching $1.1106, while the dollar slipped 0.2% against the Japanese yen, trading at 143.44.

In the bond market, the yield on benchmark U.S. 10-year notes decreased by 3.9 basis points to 3.729%, while the 30-year bond yield fell by 4.7 basis points to 4.0207%. The two-year yield also saw a decline, reflecting changing interest rate expectations.

In energy markets, oil prices closed relatively unchanged amid worries about demand in the U.S. and China, coupled with a potential increase in supplies from Libya, although there were notable draws from U.S. inventories and delays in output increases by OPEC+ producers. West Texas Intermediate crude settled down 0.07% at $69.15 a barrel, marking its lowest close since December.

In commodities, gold prices rose as the weakening dollar and falling Treasury yields prompted investors to consider the possibility of substantial rate cuts by the Fed. Gold increased by 0.85% to $2,515.31 an ounce, while U.S. gold futures gained 0.57%, reaching $2,507.60 an ounce.