Stocks rise as investors cling to hopes for US rate cuts
Friday's U.S. July nonfarm payrolls report missed expectations and revised the figures for May and June sharply lower, sparking a selloff on Wall Street and denting the dollar.
By Monday, with the chance of a September rate cut from the Federal Reserve at 85 per cent, some stability returned to the broader market, allowing Europe's STOXX 600 to rise 0.6 per cent in morning trading. The dollar edged up against a basket of six other major currencies.
Downward revisions in the payrolls report left the three-month average of jobs growth at 35,000 from 231,000 at the start of the year.
"I guess the biggest takeaway from all that is the net revision. We've all seen poor NFP prints in the past, that we can explain away as a 'one-off', but such a chunky net downward revision suggests that this could well be a more pronounced weakening in labour market conditions that is underway," Pepperstone market strategist Michael Brown said.
President Donald Trump's decision to fire the head of Labor Statistics in response added an extra layer of nervousness over the credibility of U.S. economic data.
News that Trump would get to fill a governorship position at the Fed early added to worries about the politicization of interest rate policy.
"It opens the prospect of broader support on the Fed Board for lower rates sooner rather than later," Ray Attrill, head of FX research at NAB, said.
"Fed credibility, and the veracity of the statistics on which they base their policy decisions, are both now under the spotlight."
Markets have essentially already eased for the Fed, with two-year Treasury yields down almost 25 basis points on Friday in the biggest one-day drop since August last year.
DOLLAR DENTED
Wall Street futures rose 0.6-0.7 per cent, suggesting some recovery after Friday's washout that drove the S&P 500 down 1.6 per cent and the Nasdaq down 2.2 per cent.
The dollar, which fell 1.4 per cent on Friday in its biggest one-day fall since April, rose broadly, leaving the euro down 0.2 per cent at $1.156 and the pound softer at $1.327 ahead of Thursday's Bank of England meeting, at which it is expected to cut rates by a quarter point.
The Swiss franc took a beating, leaving the dollar up 0.6 per cent as markets reopened in Zurich after a public holiday on Friday, when Trump announced a 39 per cent tariff on Swiss imports.
The dollar was also up 0.4 per cent against the yen at 148 , having shed an eye-watering 2.3 per cent on Friday.
In commodity markets, gold was little changed at $3,358 an ounce , having climbed more than 2 per cent on Friday, while oil prices extended their latest slide as OPEC+ agreed to another large rise in output for September.
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