US markets ended the week on a downbeat note, with both the S&P 500 and Nasdaq experiencing sharp declines. The selloff was triggered by weak August jobs data, which raised concerns about the strength of the US economy and led investors to retreat from riskier assets. Despite hopes for a Federal Reserve rate cut later this month, uncertainty over the labour market’s health and broader economic conditions cast a shadow over market sentiment. The technology and semiconductor sectors, in particular, saw significant losses, reflecting the heightened caution among investors as the week drew to a close.

Key Takeaways:

  • S&P 500 Posts Worst Weekly Loss Since March 2023: The S&P 500 tumbled 1.73% on Friday to close at 5,408.42, marking a 4.3% loss for the week, its worst performance since March 2023. Concerns over weak August jobs data and general economic uncertainty contributed to the sharp decline.
  • Nasdaq Suffers Weekly Drop: The Nasdaq Composite plunged 2.55% on Friday to end at 16,690.83. The index recorded a 5.8% decline for the week, making it the worst week since 2022, as growth concerns led to broad-based selloffs across sectors.
  • Dow Drops Over 400 Points: The Dow Jones Industrial Average fell 410.34 points, or 1.01%, on Friday, closing at 40,345.41. The index posted a weekly decline of 2.9%, reflecting investor worries about slowing economic growth and a potential Fed response.
  • August Jobs Data Falls Short: Nonfarm payrolls increased by just 142,000 in August, well below expectations of a 161,000 rise. However, the unemployment rate ticked down slightly to 4.2%, in line with forecasts, leaving mixed signals about the strength of the US labour market.
  • European Markets Struggle Amid Weak US Data: The pan-European Stoxx 600 fell 1.15% on Friday, with all major bourses in the red, marking a 2.5% weekly decline, the worst since early August. Germany’s DAX fell 1.5% to 18,302, weighed down by a 2.4% drop in industrial production in July, particularly a sharp 8.1% decline in the automotive sector. The FTSE 100 Index closed the week down 2.33%, ending at 8,181.47, while France’s CAC 40 slipped 1.2%, further reflecting the region’s economic slowdown.
  • Asian Markets Mixed Amid Japan’s Weak Data and Hong Kong Shutdown: Japan’s Nikkei 225 slipped 0.72% on Friday to 36,319.47, its fourth straight day of losses. Japan’s household spending data for July showed a mere 0.1% rise, well below the 1.2% increase expected, sparking concerns about domestic economic momentum. In South Korea, the Kospi fell 1.21% to 2,544.28, marking a four-day losing streak. Meanwhile, Australia’s S&P/ASX 200 defied the trend, rising 0.39% to 8,013. Mainland China’s CSI 300 traded 0.81% below the flatline, closing at a fresh seven month low. Hong Kong’s markets remained closed due to a typhoon.
  • Oil Prices Plummet in Worst Week Since October 2023: US crude oil prices fell 2.1% on Friday, closing at $67.67 per barrel. Brent crude ended the session at $71.06 per barrel, down 2.2%. Both benchmarks posted their worst weekly declines in nearly a year, with US crude down 8% and Brent falling 9.8% for the week. OPEC+ delayed its planned production increase of 180,000 barrels per day until December, which failed to reassure markets, intensifying concerns about a supply-demand imbalance.
  • Treasury Yields Fall as Economic Concerns Rise: US Treasury yields declined as investors digested the weaker-than-expected jobs data, raising concerns about an economic slowdown. The yield on the 10-year Treasury dipped 1 basis point to 3.723%, while the 2-year yield fell 9 basis points to 3.665%, reflecting growing expectations that the Federal Reserve could cut rates by a larger margin at its upcoming policy meeting.

FX Today:

  • EUR/USD Steady Despite Mixed Signals from US Labour Market: The EUR/USD pair traded around 1.1100 on Friday as investors digested disappointing US labour market data. Nonfarm payrolls for August came in lower than expected at 142,000, but the unemployment rate ticked down to 4.2%, in line with forecasts. The pair remained steady amid growing speculation that the Federal Reserve may implement a significant rate cut at its upcoming meeting. Immediate upside resistance is seen at 1.1160, followed by the 1.1200 mark. On the downside, support levels are located at 1.1040 and the key psychological level of 1.1000.
  • GBP/USD Retreats as US Dollar Finds Ground: The GBP/USD pair fell back to the 1.3130 area on Friday after briefly spiking to 1.3240 following the release of the US Nonfarm Payrolls report. While the softer US jobs data initially lifted the British Pound, the subsequent shift in market sentiment helped the US Dollar regain some ground. The Relative Strength Index (RSI) dropped below 60, signalling a loss of bullish momentum. Key support levels for the pair lie at 1.3110 and 1.3100, while immediate resistance can be found at 1.3200, followed by 1.3260.
  • NZD/JPY Continues Downward Slide as Global Sentiment Deteriorates: The NZD/JPY pair continued its downtrend on Friday, falling sharply to 87.85 as weak US jobs data fuelled concerns about global economic growth. Technical indicators suggest further downside potential, with support levels at 87.50 and 87.00. Resistance is located at 88.00 and 88.50, but the overall bearish trend remains intact as the pair struggles to gain upward momentum.
  • Gold Falls as Markets Await Fed Decision: Gold prices dipped below the key $2,500 level on Friday, closing at $2,493 after hitting a high of $2,529 earlier in the session. The precious metal retreated as investors weighed weaker US economic data against the possibility of a Federal Reserve rate cut. Key support lies at $2,470, with further declines potentially targeting $2,435. On the upside, resistance remains at $2,531, with a push beyond that level possibly leading to $2,550.
  • Silver Drops as Risk-Off Mood Intensifies: Silver prices dropped sharply on Friday, losing over 3% to close at $27.89 after reaching an intraday high of $29.11. A risk-averse sentiment in global markets coupled with a strengthening US Dollar pressured the metal. Immediate support is seen at $27.18, and further downside could push prices toward $27.00. Resistance stands at $29.00, with the next key level at $30.00 if buying interest returns.

Market Movers:

  • Nio Rallies on JPMorgan Upgrade: US-listed shares of Chinese electric vehicle maker Nio surged 3.5% after JPMorgan upgraded the stock to overweight from neutral. The firm cited a potential recovery rally for the company following a challenging year, which spurred strong buying interest in the stock.
  • Super Micro Computer Falls on Downgrade: Super Micro Computer shares dropped more than 6% after JPMorgan downgraded the artificial intelligence server producer to neutral from overweight. The downgrade came after the company delayed its annual 10-K filing, raising concerns about regulatory compliance. JPMorgan also slashed its price target by $450 to $500, further weighing on investor sentiment.
  • DocuSign Gains After Strong Earnings Report: DocuSign shares rose around 4% following the company’s better-than-expected fiscal second-quarter results. The software company reported 97 cents in adjusted earnings per share on $736 million in revenue, beating analysts’ estimates of 80 cents per share and $727 million in revenue. Strong subscription growth drove the upbeat performance.
  • Guidewire Software Jumps on Earnings Beat: Guidewire Software stock surged 12.4% after the company posted better-than-expected fiscal fourth-quarter earnings. Guidewire reported 62 cents per share, excluding items, on $291.5 million in revenue, topping analyst expectations of 54 cents per share and $283.8 million. The company’s full-year revenue forecast also exceeded market expectations, fuelling the stock’s rally.
  • UiPath Slides Amid Tech-Led Selloff: Despite reporting better-than-expected fiscal second-quarter adjusted earnings and revenue, UiPath shares fell 6% on Friday as part of the broader tech selloff. The company’s stock repurchase program expansion failed to boost investor confidence amidst the sector-wide declines.
  • Bowlero Rises 6.6% After Revenue Beat: Bowlero, the bowling centre operator, saw its stock rise 6.6% after reporting fiscal fourth-quarter revenue of $283.9 million, beating analysts’ expectations of $273.4 million. The earnings beat provided a positive lift in an otherwise difficult trading environment for consumer-related stocks.
  • Intel and Mobileye Decline on Strategic Concerns: Shares of Intel fell 2.6%, while its autonomous driving subsidiary Mobileye saw a sharper decline of 8.5%. The drop followed reports that Intel is weighing options for its stake in Mobileye, creating uncertainty about the future strategy of the chipmaker’s investment in the autonomous driving sector.
  • Semiconductor Stocks Slide, Led by Broadcom’s Decline: Broadcom shares plummeted 10% after issuing lacklustre guidance for the current quarter. Other semiconductor stocks followed suit, with Nvidia and AMD both dropping around 4%, while the VanEck Semiconductor ETF (SMH) closed down 4%, marking its worst weekly performance since March 2020.

As the week came to a close, markets faced significant pressure across multiple sectors, with the S&P 500 suffering its worst weekly performance since March 2023 and the Nasdaq registering its largest decline since 2022. Weaker-than-expected August jobs data and a broad selloff in semiconductor stocks weighed heavily on investor sentiment, driving sharp losses in major indices. European markets also struggled, posting their largest weekly losses since early August, while Asian markets reflected mixed performances amidst ongoing economic concerns. Oil prices dropped to their lowest levels since June 2023, while US Treasury yields fell as investors braced for potential Federal Reserve rate cuts. Despite this, pockets of strength emerged, with stocks like Nio and Bowlero gaining on strong corporate news, though the broader market outlook remains clouded by economic uncertainty.