European shares record worst performance in a month on mixed US data

European shares on Friday turned in their worst performance in a month after a widely anticipated US jobs report offered mixed signals on the size of a potential Federal Reserve rate cut later this month.
The pan-European Stoxx 600 index fell 1 per cent, marking a fifth day of decline. The index also snapped a four-week winning streak.
A Labor Department report showed US employment increased less than expected in August, but a drop in the jobless rate to 4.2 per cent suggested an orderly labour market slowdown continued.
Traders’ bets for a 0.25 percentage point rate cut in September stood at 73 per cent, according to the CME Group’s FedWatch Tool, while those for a 0.5 point reduction in rates were at 27 per cent, down from a brief rise to 51 per cent after the data.
The Iseq All-Share index lost 1.1 per cent to 9,571.96, with housebuilders among the worst performers, in line with a weak showing by UK peers on Friday.
Glenveagh Properties slid 5.1 per cent to €1.44, while Cairn Homes lost 7 per cent to €1.78, even though both had unveiled robust interim results during the week.
Banks were also out of sorts, with AIB off 1.7 per cent at €5.28 and Bank of Ireland down 2 per cent at €9.93.
Dalata Hotel Group dropped 5.5 per cent to €3.89. Deutsche Bank downgraded its rating on the company to hold from buy after reducing its earnings forecast.
The UK’s main stock index ended lower on Friday, dragged down by personal goods and automobile shares, while investors assessed US jobs report data to determine the extent of expected interest rate cuts by the Federal Reserve.
The blue-chip index FTSE 100 fell 0.7 per cent, marking its sixth straight daily decline and lost 2.5 per cent for the week, its steepest weekly loss since mid-January.
The automobiles and parts index slipped 3.1 per cent, while industrial metal miners fell 2.7 per cent on lower copper prices as a stronger dollar and mixed US jobs data added to concerns about global economic growth.
The European Central Bank is also poised to cut rates while the Bank of England is likely to hold this month.
Meanwhile, data showed British house prices rose last month at the fastest annual pace since late 2022, while a report showed the nation needs an additional one trillion pounds in investment in the next decade to grow the economy.
In Europe, all major country indexes fell around 1 per cent, with Germany’s DAX index dropping 1.6 per cent. Declines in oil and metal prices weighed on commodity stocks, while the rate-sensitive bank sector fell 1.8 per cent.
Next week the European Central Bank is widely expected to ease rates by a quarter of a point. European markets, however, are likely to take their cues from overseas, with US inflation data expected to be the biggest mover.
Among individual stocks Volvo Cars dropped 5.7 per cent. The Swedish automaker slashed its margin and revenue ambitions for a second time in a year on Thursday at its capital market day.
Poland’s InPost jumped 11.7 per cent to the top of the Stoxx 600 as it reported a 29 per cent surge in second-quarter earnings.
Wall Street’s main indexes had fallen to their lowest in over three weeks by midafternoon trade after a crucial jobs report did little to clear the uncertainty around the magnitude of the Federal Reserve’s interest rate cut expected at its meeting later this month.
Rate-sensitive growth stocks such as Alphabet and Tesla fell while Nvidia was also out of sorts.
“There’s uncertainty about what the Fed is going to do,” said Melissa Brown, managing director of investment decision research at SimCorp.
Broadcom dropped after the chipmaker forecast fourth-quarter revenue slightly below estimates, hurt by sluggish spending in its broadband segment.
Among others Super Micro Computer fell after brokerage JP Morgan downgraded the AI server maker’s shares to neutral from overweight. – Additional reporting, Reuters