Global stocks tumble on disappointing US jobs data

S&P 500 index falls more than 1 per cent amid growth concerns in world's largest economy

The New York Stock Exchange. The Dow Jones industrial average fell 1 per cent to close at 40,345.41 on concerns related to the US economy. AFP

Global stock markets tumbled on Friday after the US reported lower than expected jobs data that pointed to a slowing economy.

The world’s largest economy added an estimated 142,000 jobs in August below the market expectations of 165,000 for the month.

However, America's unemployment rate edged lower to 4.2 per cent from 4.3 per cent, in line with expectations.

“The results of the US employment report were interpreted as a sign of uncertainty in global markets, where the main indices reacted with mixed signals initially,” Quasar Elizundia, expert research strategist at brokerage firm Pepperstone, said.

“However, as the day progressed, the markets shifted to a more risk-averse stance,” impacting global financial markets.

In New York, the Dow Jones industrial average fell 1 per cent to close at 40,345.41, while the S&P 500 dropped 1.7 per cent and the Nasdaq Composite by 2.6 per cent.

Stock markets in Europe and Asia were also impacted following the US jobs data.

In London, FTSE 100 ended 0.7 per cent lower, while Paris’s CAC 40 dropped 1.1 per cent and Frankfurt's DAX shed 1.5 per cent.

In Asia, Tokyo's Nikkei 225 declined 0.7 per cent, while Shanghai Composite retreated 0.8 per cent.

Oil prices also fell, despite a move by Opec+ exporters to delay a planned production boost from next month.

Brent, the benchmark for two thirds of the world’s oil, fell 2.24 per cent to end at $71.06 a barrel, while West Texas Intermediate, the gauge that tracks US crude, settled down 2.14 per cent to $67.67 a barrel.

For the week, Brent fell by 10 per cent, while WTI dropped about 8 per cent.

Friday's job report was seen as crucial in determining whether the Federal Reserve would initially cut rates by 25 or 50 basis points.

Federal Reserve governor Christopher Waller suggested the central bank is leaning towards a quarter-rate cut at its September 17 meeting.

“I do not expect this first cut to be the last. With inflation and employment near our longer-run goals and the labour market moderating, it is likely that a series of reductions will be appropriate,” he said at the University of Notre Dame, in Indiana.

He also said he does not believe the economy is in a “recession or necessarily headed for one soon”. Still, he said he would be open to a larger rate cut if new data supports it.