Labour statistics take center stage in the United States
Stock markets in Europe started off on a downward trend today. The DAX was down 0.2% at 24,270 points after the market opened, while the Euro Stoxx 50 Index was trading at 5,403 points, a minor drop from the previous day.
Cautious trading vibe
Investors are adopting a measured approach due to several factors. The ongoing trade dispute between the U.S. and China, coupled with the U.S. jobs data scheduled later in the day, has created a feeling of apprehension. This sentiment was felt during the trading session in Asia, where the Nikkei Index inched up 0.5% to 37,741 points, while the broader Topix also saw a 0.5% gain. Meanwhile, the Shanghai Composite and the index of major companies in Shanghai and Shenzhen remained largely unchanged.
A pool of anxiety
Luke Yeaman, chief economist at the Commonwealth Bank of Australia, noted that the latest phone call between U.S. President Donald Trump and Chinese President Xi Jinping indicated that both countries have limits for economic pain. However, tensions remain high, and escalations are likely. The future of a comprehensive trade agreement between the U.S. and China remains uncertain.
Recent reports suggest that Chinese President Xi Jinping had spoken with Trump on Thursday. The world's two largest economies are at odds. They agreed on May 12 to a 90-day agreement to roll back some of the tariffs they had imposed on each other. However, the 90-day truce to reduce tariffs is shaky.
Awaiting job figures
Besides trade policy, investors are keeping a close eye on the U.S. jobs report, which will influence the Federal Reserve's monetary policy. Respondents in a Reuters poll anticipate fewer new jobs outside of agriculture to be created in the U.S. in May. Low employment numbers could prompt the Federal Reserve to lower interest rates. On average, respondents predict the creation of 126,000 new jobs, down from 177,000 in the previous month. The unemployment rate is expected to remain constant at 4.2%. Hourly wages are projected to increase by 0.3%, up from 0.2% in April. The 10-year Treasury yield remains relatively stable, at 2.56% compared to 2.59% the preceding day.
Trade tension jitters European markets, creating an atmosphere of volatility and uncertainty. As investors grapple with the potential for surging tariffs and economic turmoil, European stocks continue to react negatively. The ongoing U.S.-China trade spat has contributed to market instability worldwide, and European markets, particularly those heavily dependent on global trade, are feeling the impact. The ever-present specter of escalating trade wars and economic uncertainties casts a shadow on investor confidence and market stability.
Due to the ongoing trade dispute between the U.S. and China and the upcoming U.S. jobs data, a pool of anxiety is flooding the finance sector, leading some investors to adopt a cautious trading approach. Consequently, Europe's stock markets are feeling the heat, evident in the downward trend observed today, with the DAX and Euro Stoxx 50 Index experiencing minor drops.