A currency trader rubs his eyes at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, on Sept. 4. Asian stock markets were mostly lower Friday as caution prevailed before the release of the monthly US jobs report and the resumption of trading on Chinese stock markets next week. AP
LONDON—Global stock markets fell sharply on Friday ahead of the release of monthly US jobs figures that could well determine whether the Federal Reserve will raise interest rates later this month—a prospect that’s unnerving investors at a time when markets have been so volatile.
Keeping score. In Europe, the FTSE 100 index of leading British shares was down 1.6 percent at 6,093 while Germany’s DAX fell 2.1 percent to 10,101. The CAC-40 in France was also 2.1 percent lower at 4,554. Wall Street was poised for a lower opening, with both Dow futures and the broader S&P 500 futures down 1 percent.
US jobs key. However, how US markets actually open will likely be impacted by the release of the August nonfarm payrolls report an hour before the bell. The payrolls figures are often the key market-moving release of the month. This time, they could be more important than usual as investors position themselves for the Sept. 17 Fed rate decision. A very strong number may well cement market expectations of a hike then.
Consensus. Analysts are forecasting that employers produced a healthy increase of 220,000 jobs and that the unemployment rate fell to 5.2 percent. Record low interest rates since the 2008 financial crisis have been a boon for stock markets so investors await the jobs data and the Fed meeting with trepidation. In recent weeks, market expectations of a September rate hike have dimmed because of signs of weakness in the global economy.
Analyst’s take. “That the door is apparently still ajar to a rate hike in September is testimony to how committed the Fed had been to getting rates off ‘zero’ before the recent bout of financial volatility and conditions tightening interjected itself,” said Alan Ruskin, an analyst at Deutsche Bank. “If the payrolls data is soft, a September hike is surely off.”
Dollar awaits. The figures could well have a big impact on the dollar, too. A strong payrolls number could send the currency surging on foreign exchange markets as traders price in the likelihood of a rate hike later this month. Ahead of the data, the dollar was fairly steady against the euro, which was trading 0.2 percent higher at $1.1141. It was weak against the Japanese yen, though, trading 0.8 percent lower at 119.18 yen.
China watch. Chinese stock markets remained closed for a second day as the country marked the 70th anniversary of Japan’s defeat in World War II. After a summer of wild volatility in the Shanghai stock market and the surprise yuan devaluation, investors may be using the Chinese holidays to reduce exposure to stocks because they are uncertain about how China will perform on Monday, said Bernard Aw, a market strategist at IG in Singapore.
Asia’s day. Japan’s Nikkei 225 tumbled 2.2 percent to finish at 17,792.16 and South Korea’s Kospi dropped 1.5 percent to 1,886.04. Hong Kong’s Hang Seng shed 0.5 percent to 20,840.61 while Australia’s S&P/ASX 200 gained 0.3 percent to close at 5,040.60. Stock markets in Southeast Asia, Taiwan and India were lower.
Energy. Benchmark US crude oil was down 38 cents at $46.37 a barrel in electronic trading on the New York Mercantile Exchange. Brent Crude, a benchmark for international oils used by many US refineries, lost 23 cents to $50.45 in London.