Global Market Jitters: Investors Brace for Crucial U.S. Jobs Report

MSCI's global equities index dipped as investors processed mixed economic data, with focus shifting to the U.S. jobs report set to influence Federal Reserve rate cuts. U.S. Treasury yields declined, and oil prices hovered near 14-month lows due to demand concerns. Gold prices rose, buoyed by a weakening dollar.

MSCI's global equities index dipped on Thursday as investors processed mixed economic data while eagerly awaiting Friday's crucial U.S. jobs report. Concurrently, oil prices hovered near 14-month lows amid demand concerns despite inventory draws. U.S. Treasury yields also saw declines, with two-year yields reaching a 15-month low following ADP's lower-than-expected private sector August jobs data.

Data revealed U.S. private employers hired the fewest workers in 3-1/2 years in August. With July figures also revised downward, signs of a labor market slowdown emerged, unsettling investors as they awaited the pivotal non-farm payroll report for August. Economists project 160,000 new jobs for August—a rise from July's 114,000—anticipating clarity on the U.S. Federal Reserve's interest rate moves at its September meeting.

Bets on the Fed kicking off its easing cycle with a half-percentage-point drop increased to 41% from 34% last week. However, a 59% probability remains that the cut will just be a quarter-point, as per CME Group's FedWatch tool. Earlier this week, Wall Street faced its steepest daily losses in nearly a month amid heightened concerns over the U.S. economy.

Tuesday's decline affected market sentiment significantly, keeping traders wary. "Today's data was similarly softer, suggesting a meaningful market move on the jobs report tomorrow morning," said Michael James, managing director of equity trading at Wedbush Securities.

Meanwhile, despite steady U.S. services sector activity indicated by the Institute for Supply Management's non-manufacturing index, stock indexes lost their earlier gains. On Wall Street, the Dow Jones fell 219.22 points, the S&P 500 lost 16.66 points, and the Nasdaq Composite gained 43.37 points. MSCI's global gauge marked its fourth consecutive day of declines.

In currency markets, the dollar eased as investors awaited the payrolls report. The dollar index fell by 0.17%, with the euro and yen strengthening slightly against it. U.S. Treasury yields declined, with the 10-year and 30-year bond yields falling 3.9 and 4.7 basis points, respectively.

Oil prices remained relatively unchanged, influenced by demand worries and potential rises in supplies from Libya, which offset bullish inventory withdrawals. U.S. crude settled at $69.15 per barrel, its lowest since December. Brent crude closed at $72.69 per barrel, its lowest since June.

Gold prices gained as the weakening dollar and lower Treasury yields spurred investors to consider a significant rate cut from the Fed. Spot gold rose by 0.85%, and U.S. gold futures increased by 0.57%.

(With inputs from agencies.)