Global stock markets remained in the red on Friday after weaker-than-expected U.S. jobs data prompted markets to increase bets on a Federal Reserve interest rate cut, following earlier losses triggered by President Donald Trump's latest wave of tariffs.
Nasdaq and S&P 500 futures fell about 1% after the data was released, in line with levels before the report was published.
The pan-European STOXX 600 index fell 1.4%, bringing its weekly drop to about 2% and is on track for its biggest weekly decline since Trump announced his first major tariff wave on April 2.
The U.S. economy added just 73,000 nonfarm jobs last month, well below the 110,000 expected in a Reuters poll, while the unemployment rate rose to 4.2%. "There's no way to cover up the weakness in this report," said Brian Jacobsen, chief economist at Annex Wealth Management.
Money market traders are now adding to bets that the Fed will cut rates at its September meeting, with the market now pricing in a 90% chance of a rate cut, compared to just 45% before the jobs report, according to LSEG data.
The weak labor data came a day after Trump signed an executive order imposing tariffs of between 10% and 41% on US imports from several major trading partners. The tariffs are set at 25% for Indian exports to the US, 20% for Taiwan, 19% for Thailand, and 15% for South Korea. Trump also raised tariffs on Canadian goods from 25% to 35% on products not covered by the USMCA trade deal, while Mexico was given 90 days to negotiate a new deal.
The US dollar, previously supported by expectations of a higher rate, reversed course after the jobs data. The US dollar index, which measures the currency against six others, fell 1% on the day. The Japanese yen, which had earlier weakened past 150 per dollar, rebounded to 148.71. The Bank of Japan kept interest rates unchanged on Thursday, but Governor Kazuo Ueda struck a cautious tone despite raising its short-term inflation forecast.
U.S. Treasury yields fell sharply. The two-year yield fell 17.5 basis points to 3.7761%, while the 10-year yield fell 9 basis points to 4.273%.
In commodities markets, oil prices continued to slide after falling 1% on Thursday. Brent fell 0.3% to $71.55 a barrel, while U.S. crude fell 0.1% to $69.22 a barrel.
