Global stock index sinks with dollar, bond yields after weak US jobs data
A trader works on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., July 30, 2025. REUTERS/Jeenah Moon
NEW YORK/LONDON :MSCI's global equities index sold off sharply on Friday and the dollar took a dive after weaker-than-expected U.S. jobs data fueled economic worries and boosted bets for September interest rate cuts while investors also considered U.S. President Donald Trump's latest tariff announcements and key personnel changes.
U.S. Treasuries were in demand after the Labor Department reported that the U.S. economy added 73,000 nonfarm payrolls last month, below economists' expectations for 110,000. June's job growth was revised sharply lower to 14,000 from 147,000.
After the report, Trump said he ordered his team to fire the commissioner of the U.S. Bureau of Labor Statistics, Erika L. McEntarfer, nominated by prior President Joe Biden for the role.
Then the dollar index and U.S. Treasury yields lost further ground when the Federal Reserve said Governor Adriana Kugler is resigning early from her term on Aug. 8, causing some investors anxiety at a time when Trump has loudly disagreed with Fed rate policies.
Late on Friday, traders were betting on an 87.5 per cent probability for a September rate cut compared with 37.7 per cent on Thursday, according to CME Group's FedWatch tool.
"The market is reacting to the possibility of the economy flipping into recession. The weak jobs data is piling on to weak earnings reports and weak guidance from some corporations," said Luke Tilley, Chief Economist, Wilmington Trust.
MSCI's gauge of stocks across the globe fell 12.23 points, or 1.32 per cent, to 917.39, suggesting its biggest daily drop since mid-April. The softer jobs data added to losses for the global index, which was already in the red after a host of tariff announcements from Trump the day before.
On Thursday, Trump ordered tariffs ranging from 10 per cent to 41 per cent on U.S. imports from several major trading partners. He increased duties on Canadian goods to 35 per cent from 25 per cent for all products not covered by the U.S.-Mexico-Canada trade agreement. He set a 25 per cent rate for India's U.S.-bound exports, 20 per cent for Taiwan's, 19 per cent for Thailand's and 15 per cent for South Korea's.
Mexico, however, got a 90-day reprieve from higher tariffs to allow for deal talks.
On the earnings front, market heavyweight Amazon tumbled more than 8 per cent on Friday after its quarterly report showed cloud computing growth that disappointed investors.
On Wall Street, the Dow Jones Industrial Average fell 542.40 points, or 1.23 per cent, to 43,588.58, the S&P 500 fell 101.38 points, or 1.60 per cent, to 6,238.01, for its biggest one-day percentage drop since May 21 and the Nasdaq Composite fell 472.32 points, or 2.24 per cent, to 20,650.13, its steepest one-day drop since April 21.
Earlier, the pan-European STOXX 600 index ended down 1.89 per cent, its biggest drop since April 9.
In currencies, the greenback reversed course to fall sharply after the data due to increased expectations for rate cuts. Earlier it had found support in fading hopes for U.S. rate cuts.
The dollar index, which measures the greenback against major currencies including the yen and the euro, fell 1.37 per cent to 98.66, the euro was up 1.52 per cent at $1.1589. Against the Japanese yen, the dollar weakened 2.26 per cent to 147.32.
"The way (the market) is going to interpret (the departures) is in a very dollar-negative way," Juan Perez, senior director of trading, Monex USA, referring to both the Kugler and McEntarfer news.
"No matter what the economic picture in the United States, the one thing that holds the U.S. dollar strong in the eyes of the world is the authority and the independence of the Federal Reserve. Whenever anything comes to potentially put that into compromise then that's when the U.S. dollar spirals down."
U.S. Treasury yields plunged on the jobs data and the increased bets for September rate cuts, and fell to fresh session lows in the late afternoon after the Kugler announcement.
Peter Tuz, president of Chase Investment Counsel, said Trump "is getting a bigger chance to appoint people whose views match his own" at the Fed. Regarding the BLS firing Tuz said "I don't like to see a bureaucrat fired just because the data that gets presented doesn't support the administration's policies."
The yield on benchmark U.S. 10-year notes fell 14 basis points to 4.22 per cent, from 4.36 per cent late on Thursday. The 30-year bond yield fell 6.4 basis points to 4.8211 per cent.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 26.1 basis points to 3.69 per cent.
In energy markets, oil prices sank about 2.8 per cent after the jobs data and on jitters about a possible production increase by OPEC and its allies. Oil had settled around 1 per cent lower on Thursday.
U.S. crude settled down 2.79 per cent, or $1.93 at $67.33 a barrel and Brent settled at $69.67 per barrel, down 2.83 per cent, or $2.03 on the day.
Elsewhere in commodities, gold prices rallied to a one-week high as investors sought safety after the weak jobs report, policy easing expectations and the latest tariff announcements.
Spot gold rose 2.14 per cent to $3,360.45 an ounce.
(Rporting by Sinéad Carew, Gertrude Chavez-Dreyfuss, Samuel Indyk, Nell Mackenzie, Stella Qiu and Rae Wee. Editing by Andrew Heavens, Mark Potter, Alexandra Hudson, Diane Craft and Sandra Maler)
