US jobs report reinforced fears that the Fed would deliver another aggressive rate hike this month
US equities fell on Friday to slide for the third week in a row as a relatively upbeat jobs report reinforced fears that the Fed would deliver another aggressive rate hike this month. The economy added 315,000 jobs in August, nearly in line with expectations while average hourly wages jumped by 5.2%. The Dow Jones Industrial Average finished the session lower by 1.1%, the S&P 500 fell roughly 1.1% and the Nasdaq Composite declined 1.3%. For the week, the Dow and S&P lost roughly 3% and 3.3%, respectively, while the Nasdaq gave up 4.2%.
Following suit, Asian markets were on the defensive on Monday amid growing concerns over new COVID-19 lockdowns. Hong Kong’s tech-heavy Hang Seng index was the worst performer in the region, dropping 1%. The Shanghai Composite Index managed to erase early losses and finished 0.4% higher after the data showed that that China’s services sector grew more than expected in August. The Nikkei 225 in Tokyo lost just 0.11% and the Kospi in South Korea finished 0.24% lower.
In Europe, stocks opened sharply lower to start the week, with the pan-European Stoxx 600 dropping 1.4% in early trade. The sentiment in the region deteriorated after Russia’s Gazprom announced that gas flows to Europe via the Nord Stream 1 pipeline would be halted indefinitely. On the data front, Spain’s August services PMI arrived at 50.6 versus 52.9 expected, slowing down to near stagnation. US markets are closed Monday for the Labor Day holiday.
Meanwhile, the US dollar advanced to fresh two-decade highs above the 110.00 figure at the start of the week due to a combination of risk-averse environment and rising expectations for another 75-bps rate hike by the Fed. The USD index briefly jumped to 110.27 before retreating marginally. Against this backdrop, the euro fell below 0.9900 for the first time since December 2002 earlier in the day to trim most of the intraday losses in recent trading. A failure to regain the 0.9940 zone in the near term would bring extra selling pressure.