European markets experienced a sharp decline, with the STOXX 600 falling 1%, marking its worst week since early August, driven by uncertainty from the U.S. jobs report and its potential impact on the Federal Reserve’s rate cut decision.

Market Impact:

  • STOXX 600 Index:
    • Fell 1% on Friday.
    • Worst weekly performance since early August, down 2.5%.
  • Germany’s DAX:
    • Dropped 1.6% due to a larger-than-expected 2.4% fall in industrial production in July.
  • Sectors Affected:
    • Technology, Basic Materials, Energy: Fell over 2%, with tech stocks particularly hit by weak Broadcom results.
    • Real Estate: Rose 0.6%, reaching its highest level since August 2022, as a rate-sensitive sector benefitted.
    • Banking Sector: Fell 1.8% due to sensitivity to interest rate expectations.

European Markets: Key Factors

  • U.S. Jobs Data:
    • Nonfarm payrolls increased by 142,000 in August, below expectations.
    • Unemployment rate dropped to 4.2%.
    • Data raised uncertainty around the size of the Fed’s rate cut, with a 23% chance of a 50 bp cut.
  • Eurozone GDP:
    • Growth revised down to 0.2% in Q2 from an earlier 0.3% estimate.
  • ECB Rate Expectations:
    • ECB expected to cut rates by 25 basis points next week, though U.S. inflation data may influence the outcome.

Individual Stock Movements:

  • Volvo Cars:
    • Dropped 5.7% after lowering margin and revenue targets for the second time in a year.
  • InPost:
    • Jumped 11.7%, leading the STOXX 600, after reporting a 29% increase in Q2 earnings.