Shares Slip and Dollar Dips as U.S. Jobs Data Looms

Global shares hovered near three-week lows, and oil prices faced their worst week in over a year as investors awaited crucial U.S. jobs data. European shares fell for a fifth straight session, and the U.S. non-farm payrolls report could influence upcoming Fed rate cuts. Market focus also turned to upcoming statements from key Fed officials.

Global shares held near three-week lows on Friday, with the dollar nursing losses and crude oil languishing near this year's lows. Investors eagerly awaited U.S. jobs data that could influence the direction of future rate cuts in the world's largest economy. Oil prices, experiencing their worst week in over a year, depended heavily on the upcoming U.S. payrolls report.

European shares opened lower, marking the fifth consecutive session of declines. The pan-European STOXX 600 index dropped 0.6%, while Germany's DAX index dipped 0.5% after data revealed a 2.4% fall in the country's industrial production for July, against a predicted 0.3% drop.

James Rossiter, head of global macro strategy at TD Securities, noted concerns over Germany's economic health, describing the country as the 'sick child of Europe.' Nevertheless, attention was firmly fixed on the U.S. job numbers, with Federal Reserve Chair Jerome Powell stressing that policymakers do not welcome further labor market weakening.

Analysts expected 160,000 new jobs in the report, and a reduction in the unemployment rate to 4.2%. Rossiter suggested that a rise in the unemployment rate to 4.3% or 4.4% could prompt the Fed to implement a significant 50 basis point rate cut. Key Fed officials were slated to speak post-data release, potentially providing further insights into the Fed's September 18 rate cut decision.

U.S. equity markets displayed volatility; Nasdaq futures fell 1.15%, and S&P futures slipped by 0.6%. Asia-Pacific shares also faced turbulence, with MSCI's broadest index outside Japan edging up 0.2%, yet eyeing a 2.8% weekly drop. China's Shanghai Composite index and the blue-chip CSI300 index both closed down, hitting their lowest levels since early February. Hong Kong markets remained closed ahead of Super Typhoon Yagi's landfall.

Market cautiousness fueled safe-haven flows into the yen, which rose 0.5% against the dollar, and into money market funds, which saw $61 billion in inflows. U.S. Treasury yields extended their weekly declines, with two-year yields down to around 3.71% and ten-year yields at 3.73%. Brent crude futures slightly recovered to $73.01 a barrel but remained down over 7% for the week, while gold steadied at just over $2,517 an ounce.

(With inputs from agencies.)