US Stocks Crash on Non-Farms Miss and Conflict Concerns – Nasdaq down 1.6%
US stocks took another big hit on Friday after US employment data came in a lot lower than expected while the conflict in the Middle East rolled on with no signs of slowing. The Dow Jones declined 0.94% to close at 47,501, while the S&P 500 fell 1.33% to finish at 6,740. The technology-heavy Nasdaq led the losses, dropping 1.59% to close at 22,387. In fixed income markets, US Treasury yields finished the session relatively steady as competing forces influenced trading. Treasury yields closed near flat as the impact of the weaker employment data was offset by continued inflation concerns. The US 2-Year fell 1.6 basis points to 3.561%, while the 10-Year edged slightly higher by 0.2 basis points to 4.138%. The US dollar softened modestly following the payrolls release but remained close to recent annual highs. The DXY slipped 0.21% to close at 98.86. Commodity markets were again dominated by developments in the Middle East. Oil prices surged sharply as the ongoing conflict continued to raise concerns about potential supply disruptions. Brent crude climbed 8.52% to $92.69, while WTI rose 12.21% to $90.90, pushing both benchmarks to their highest levels since September 2023. Gold also attracted buying interest after briefly testing weekly lows earlier in the session. The precious metal rebounded 1.75% to close at $5,171.74, returning to the middle of its recent trading range.
US Stagflation Concerns Increase After Weak Jobs Numbers
Global markets ended the week on a volatile note on Friday as a sharp downside surprise in US employment data combined with ongoing geopolitical tensions in the Middle East to weigh on investor sentiment. Stagflation – when an economy has high inflation and high unemployment – concerns have increased, and US equity markets moved lower following the release of the latest Non-Farm Payrolls report, which showed the US economy lost 92k jobs compared with expectations for a gain of 58k. On the other side of the equation, the war in the Middle East has seen inflation worries increase dramatically, and this morning’s jump in oil prices will not have helped, putting even more doubt on the next move from the Fed. We have two key US inflation numbers due out this week: the CPI and the Core PCE Price Index, and if they remain sticky, expect the inflation side of the argument to win out with Fed expectations, despite that huge miss in jobs numbers on Friday.
Volatile Start to Another Big Week
Looking ahead, the macroeconomic calendar is relatively quiet to start the week. However, markets are likely to remain highly sensitive to geopolitical developments, with traders expecting continued volatility as updates emerge from the Middle East. We have already seen massive moves on the Asian open today, with oil prices jumping over $10 and both benchmarks punching through the $100/b mark, and the dollar pushing back higher against all the majors. There will be a focus on Chinese markets midway through the day, with the key CPI (exp +0.9% y/y) and PPI (exp -1.1% y/y) data sets due out, which should see a reaction in local markets. There is little of note on the calendar for the rest of the day; however, traders are expecting to remain very busy as the war in the Middle East pushes on.
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