Europe close: Another soft US jobs report stokes volatility and losses

ecb dl euro bonds economy bank notes consumer inflation — New signature for euro banknotesAngela Morant/ Courtesy of the European Central Bank

European equities extended the previous session's sharp falls as another weak reading on US non-farm payrolls sparked talk - rightly or wrongly - of a 'policy error' by that country's central bank.

A few months back, many observers were crowing that the Fed might perhaps not even need to cut rates at all in 2024 and that market pricing for rate cuts coming into 2024 had been too dovish.

Come Friday however and Citi as well as JP Morgan were anticipating 50 basis point rate cuts by the Fed in September and November, whilst other houses had also revised up their rate cut calls.

The pan-regional Stoxx 600 index dropped 2.73% to finish at 497.85, alongside similar-sized falls for German and Italian issues.

Adding to the dour mood, overnight Japan's Nikkei-225 fell almost 6% amid worries about growth and the yen.

Strikingly, the VStoxx volatility gauge surged 35% to 24.519.

Ten-year German government bond yields declined by seven basis points to 2.18%, euro/dollar was above 1.09, gold futures hit an intraday high above $2,500/oz. but failed to claim that psychological level on a weekly basis.

Front-dated Brent meanwhile was off by 2.23% at $77.3 a barrel on the ICE.

In equity markets, chipmakers were battered as Intel slumped 27% after the sector giant suspended its dividend and said it would cut 15% of its workforce in response to retrenched spending on traditional data center semiconductors and a focus on AI chips.

ASM International fell more 13%, while BE Semiconductor was down 9% and ASML by 11%.

IAG jumped 5% after the BA and Iberia owner said it would start paying dividends again, posted a rise in first-half profits and abandoned its pursuit of Air Europa.

GSK rose as it said the US Food and Drug Administration has approved its Jemperli treatment in combination with chemotherapy and then use on its own for adult patients with primary advanced or recurrent endometrial cancer.

Dutch chemical maker and distributor IMCD led the gainers on the Stoxx 600 after better-than-expected second quarter earnings.