US equity markets sold off aggressively on Friday after a disappointing US jobs report.
US nonfarm payroll showed jobs increased 114k in July, much lower than the 175k jobs that the market expected.
The softer than expected US jobs data started a significant equity selloff, causing a massive surge in volatility.
US interest-rate markets took the news as a clear sign that the FOMC will have to cut rates aggressively to stave off recession and are now pricing in more than 100 basis points of cuts priced by the end of 2024.
The S&P 500 closed 1.8% lower while the Dow Jones fell 1.5% and the tech heavy Nasdaq dropped 2.4% to finish the week 3.4% lower.
Market contagion spread to Asia where the Nikkei was down 5.8% – the sharpest one day drop since the pandemic in March 2020, and to Europe where Euro Stoxx fell 2.7%.
In currency markets the USD was also hit hard, with the USD/JPY falling by around 1.89% to 146.50, the lowest level since Dec 23.
Commodities weren’t left out, oil fell by 3.7% to an eight-month low amid concerns over the global economy. WTI is currently trading at around US$73.52 per barrel.
Locally, all eyes will be on the RBA meeting on Tuesday and the subsequent SOMP, to see which way the RBA is leaning.
