Markets Await US Jobs Report While Digesting ECB Decision
European equities showed resilience in cautious trading on Friday as investors monitored the approaching US nonfarm payrolls report while processing the European Central Bank’s latest monetary policy decision and ongoing global trade tensions.
By 03:05 Eastern Time (15:05 Beijing Time), Germany’s DAX index edged down 0.1%, while France’s CAC 40 gained 0.1% and the UK’s FTSE 100 rose 0.2%.
Employment Data Takes Center Stage
The day’s primary focus will be the monthly US nonfarm payrolls report, a crucial indicator of labor market strength following a series of disappointing economic data points this week. Economists forecast 130,000 new jobs were created last month, down from April’s 177,000 increase, with the unemployment rate expected to hold steady at 4.2% for a third consecutive month.
A significantly weaker-than-expected report could prompt Fed policymakers to reconsider their pause on interest rate cuts, which began last December as they assessed the inflationary impact of Trump’s tariff policies. Current Fed futures pricing shows limited probability for a September cut, though markets have fully priced in about 90% likelihood for a reduction by December, with another cut expected before year-end.
ECB Rate Decision Under Scrutiny
Investors continued digesting the ECB’s widely anticipated rate cut announced Thursday—the eighth reduction since June of last year. The central bank cited persistent uncertainty from global trade tensions and weakening inflation pressures as justification for easing borrowing costs.
However, the ECB also signaled its easing cycle is approaching its conclusion, suggesting another cut in July appears unlikely. ECB policymaker Martins Kazaks told Reuters the bank should pause rate reductions at each meeting to preserve policy space given economic uncertainties.
Supporting data emerged Friday morning showing German industrial production fell 1.4% in April month-over-month, following a revised 2.3% increase (preliminarily reported as 3.0%) in March.
Geopolitical Developments
On the diplomatic front, German Chancellor Friedrich Merz held what was characterized as a productive meeting with US President Donald Trump on Thursday, with both leaders agreeing to strengthen cooperation on trade matters.
Adding to positive sentiment, Trump and China’s top leader conducted a telephone conversation overnight, agreeing to further dialogue—though no concrete agreements were reached, the communication may help ease recent tensions.
Corporate Focus: Tesla and Tech Sector
In corporate news, French software firm Dassault Systèmes (EPA:DAST) pushed back its medium-term earnings target by one year to 2029, citing weakened automotive demand and tariff-related uncertainties impacting its business.
Tesla (NASDAQ:TSLA) remains in focus after Politico reported White House staff arranged a call between CEO Elon Musk and President Trump to mediate their public dispute. Tesla shares plunged more than 14% Thursday in New York trading, wiping out approximately $150 billion in market capitalization.
Energy Markets Outlook
Oil prices edged lower Friday on persistent concerns about slowing growth and weakening demand, though both benchmarks remained on track for their first weekly gain in three weeks amid expectations of tighter global supply.
By 03:05 Eastern Time, Brent futures declined 0.5% to 65.02perbarrel,whileUSWTIcrudefuturesdropped0.563.02 per barrel.
Week-to-date, both benchmarks have reversed earlier losses, with Brent showing a 2% gain and WTI rising 4% for the week.
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