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06 Sep, 2024 19:16 06 Sep, 2024 19:16

Europe close: Stocks slump after weaker-than-expected US payrolls data

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Eurotower, Frankfurt am Main, GermanyCourtesy of the European Central Bank

European stocks ended down sharply and at their session lows following the release of a weaker-than-expected US jobs report when revisions are included.

The US government reported a 142,000 person increase in non-farm payrolls for the month of August (consensus: 160,000), which together with revisions pushed the three-month average rate of change down to 116,000.

In turn, Fed funds futures were left pricing in four 25 basis point rate cuts by the end of 2024, instead of two, albeit no 50bp reductions.

The Stoxx 600 gave up 1.07% to 506.56, alongside a 1.48% slump in the German Dax to 18,301.90.

Euro/dollar dipped 0.25% to 1.1081 while Brent crude oil futures continued to slide towards $70 a barrel on the ICE.

Following the latest jobs data, Federal Reserve governor Christopher Waller said he was open to a possible 50bp cut in September - if appropriate - but didn't see the economy in or headed into a recession.

Closer to home, figures released earlier by Destatis showed that German industrial production fell by 2.4% on the month in Jul (consensus: -0.3%).

Carsten Brzeski, global head of macro at ING, said: "Today’s data is a cold shower for everyone hoping for a speedy recovery. In fact, it suggests that the bottoming out of industry still has a long way to go. We've already got weak sentiment indicators, and the risk of yet another quarter of stagnation or even contraction has clearly increased."

Elsewhere, figures from Eurostat showed the eurozone economy expanded at a quarter-on-quarter pace of 0.2% over the three months to June (Preliminary: 0.3%).

Eurostat also released labour data, which showed the number of employed people increased by 0.2% in the eurozone and by 0.1% in the wider EU in the second quarter.

On the corporate front, Rolls-Royce fell again after the European air regulator announced an inspection of the UK firm's Trent XWB-97 engines following this week’s Cathay Pacific incident.

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