European Shares Witness Worst Day Since August: Mixed U.S. Jobs Data Complicates Rate Cut Decision

European shares slumped for a fifth consecutive session on Friday, marking their worst day since August. This followed mixed signals from a U.S. jobs report, which cast doubts on the Federal Reserve's forthcoming rate cut decision. The STOXX 600 index witnessed a 2.5% weekly loss, driven by declines in technology, basic materials, and energy sectors.

European shares experienced their worst decline since early August on Friday, marking the fifth consecutive session of losses. This downturn was triggered by a U.S. jobs report that gave mixed signals about the Federal Reserve's potential rate cut later this month. The pan-European STOXX 600 index dropped by 1%, ending a four-week winning streak with a 2.5% weekly loss, the steepest since August 2.

U.S. employment growth in August fell short of expectations, casting doubt on the likelihood of a 50-basis-point rate cut by the Fed. While the unemployment rate did decrease, investors were left uncertain. As of 1611 GMT, the probability of a 50 bp rate cut stood at just 23%, based on the CME's FedWatch tool, though it briefly spiked to over 51% following the data release.

Michael Brown, senior research strategist at Pepperstone, noted that markets would remain choppy and volatile over the next few weeks, given the unpredictability surrounding the Fed's next move. Major European indexes, including Germany's DAX, fell around 1%, with Germany's DAX index experiencing a 1.6% drop after disappointing industrial production data. Additionally, sectors such as technology, basic materials, and energy dragged down the STOXX 600 by over 2% each.

(With inputs from agencies.)