European stocks fell on Monday as investors struggled to interpret diverging US employment data and prepared for the country’s inflation reading later in the week to gauge the Federal Reserve’s future path for interest rates.
Europe’s region-wide Stoxx 600 lost 0.1 per cent at the opening bell after declining 2.4 per cent last week, while France’s Cac 40 fell 0.2 per cent and Germany’s Dax declined 0.4 per cent.
The sell-off echoed Asia, where the Chinese benchmark CSI 300 lost 0.8 per cent. Hong Kong’s Hang Seng index was flat.
The moves came after a four-day losing streak on Wall Street. Economic data last week that pointed to a slowdown in the world’s largest economy added to a weaker than expected corporate earnings season.
The closely watched non-farm payrolls report released on Friday showed the US economy added 187,000 jobs in July, fewer than the 200,000 forecast by economists polled by Reuters. Wage growth, however, exceeded expectations.
The slowing jobs market comes more than a year after the US central bank began its aggressive monetary tightening campaign, bringing the benchmark federal funds rate to its highest level in 22 years in an effort to tackle raging inflation.
While the overwhelming majority of the market expects the Fed to keep rates steady at its next meeting in September, policymakers signalled that their decision would depend on a string of economic data releases due until then.
Futures contracts tracking Wall Street’s benchmark S&P 500 added 0.4 per cent, while those tracking the tech-focused Nasdaq 100 advanced 0.6 per cent ahead of the New York open.
The dollar gained 0.25 per cent against a basket of six currencies on Monday.
Yields on the policy-sensitive two-year US Treasury jumped 0.03 percentage points to 4.83 per cent, while yields on the benchmark 10-year note rose 0.02 percentage points to 4.08 per cent. Bond yields gain as prices fall.
Investors have turned their attention to the US consumer price index coming out on Thursday. The data is expected to show that the country’s annual headline inflation accelerated to 3.3 per cent in July from 3 per cent in the previous month.
Meanwhile, oil prices steadied after hitting their highest levels in nearly four months on Monday, amid concerns over escalation of fighting in the war in Ukraine and production cuts by Saudi Arabia.
Brent crude, the international benchmark, slipped 0.13 per cent to $86.16 a barrel, remaining near its highest levels since mid-April, while US marker West Texas Intermediate fell 0.14 per cent to $82.69 a barrel.