A cautious start to the week globally lies ahead after the weak US August jobs data and downbeat German factory-raised new questions about the health of the global economy only two days after news of China and the US restarting their trade talks sent a burst of confidence through markets.
Friday’s mixed to weak trading saw US shares rise 1.8%, Eurozone shares, 2.1%, Japanese shares, 2.4% while Chinese shares jumped 3.9%.
This week the European Central Bank’s monetary policy decision on Thursday is the major event that could swing market sentiment. A rate cut is forecast along with details of a new round of quantitative easing.
Friday saw the Dow and S&P 500 notch gains on Friday, but the Nasdaq fell in the wake of the weak 130,000 new jobs report for August. That was down from 159,000 in July (cut from the first estimate of 164,000).
That compared to market estimates around 170,000 news jobs. And while the US jobless rate was unchanged at 3.7% and wages rose a solid 3.2% (annually) investors took the jobs figures as confirmation the US Federal Reserve will cut rates at its meeting later this month.
In a speech in Switzerland, Fed Chairman Jerome Powell described the economy and labor market as healthy, adding the central bank didn’t think the US economy would be in recession.
His remarks were seen setting up a rate cut from the US central bank next week.
So the Dow rose 69.31 points, or 0.3%, to 26,797.46, while the S&P 500 index added 2.71 points, or about 0.1%, to end the week on 2,978.71.
The Nasdaq slipped 13.75 points, or 0.2%, to finish at 8,103.07.
For the week, the Dow rose 1.5%, while the S&P 500 and Nasdaq both rose 1.8% over the period, according to FactSet data.
The Dow is now 2.1% shy of its record closing peak at 27,359.16, reached July 15, while the S&P 500 is about 1.6% short of its all-time closing high set July 26 at 3,025.86. The Nasdaq is 2.7% from its July 26 record at 8,330.21.
