U.S. equity markets finished the week mostly higher as hopes for Federal Reserve rate cuts grew amid disappointing August labour data, just 22,000 jobs were added, well below forecasts, and unemployment rose to 4.3%. Investors now anticipate one or two rate cuts through the end of 2025.
In Europe, major equity indexes slipped on growth concerns. Eurozone headline inflation edged up to 2.1%, exceeding the ECB’s 2% target, but ECB officials suggested interest rates will likely stay unchanged in September and beyond.
Japanese markets advanced, led by auto stocks after a new U.S.-Japan trade deal capped tariffs and Japan pledged significant investment in the U.S. Meanwhile, Chinese equities dipped as investors locked in profits following a summer rally.
The U.S. nonfarm payrolls report disappointed with just 22,000 jobs added in August—far below the forecast of 75,000 and last month’s revised 79,000 gain. The unemployment rate rose to 4.3%, its highest level this year. June figures were revised to show a loss of 13,000 jobs, marking the first negative month since 2020. After last Friday's jobs report, markets are now expecting 100% probability of a Fed rate cut in September. In fact, markets now see about a 12% chance that the Fed will cut rates by an outsized 0.50%.
Index |
Current Price |
1 Week Return % |
S&P 500 |
6,481.50 |
0.33% |
DJIA |
45,400.86 |
-0.32% |
Nasdaq |
21,700.39 |
1.14% |
Nikkei 225 |
43,018.75 |
1.65% |
FTSE 100 |
9,208.21 |
0.23% |
Shanghai Composite |
3,812.51 |
-1.18% |
Sensex |
80,710.76 |
1.13% |
ADX Index |
10,033.75 |
-0.60% |
Gold |
3,653.30 |
4.02% |
Brent Oil (Brent) |
65.50 |
-3.85% |
After a strong rally with the S&P 500 gaining over 25% since its April lows, the market now faces several challenges. The labour market shows signs of softening, and inflation remains above the 2% target. Despite this, the likelihood of Federal Reserve rate cuts remains high, with investors expecting more accommodative policy if inflation stays in check. While volatility may increase through September and October, these periods could offer opportunities to buy quality stocks, particularly in US large- and mid-cap sectors like technology and financials, while extending duration in investment-grade bonds remains advisable.
Let our investment specialists help you tailor your portfolio for what’s ahead.
Disclaimer
This commentary is provided for informational purposes only and does not constitute investment advice. For detailed insights, contact our investment team.
