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Global shares are in the red following US jobs data and Trump's tariffs

The global stock market remained negative on Friday, after weaker-than-expected U.S. employment data led markets to increase their bets that the Federal Reserve would cut rates. This followed earlier losses caused by U.S. president Donald Trump's latest trade war salvo.

Nasdaq and S&P futures fell about 1% following the data release, roughly in line with their previous levels.

The pan-European STOXX 600 dropped 1.4%. This brings its weekly decline to around 2%, and puts it on course for its largest weekly drop since Trump's first major tariff wave on April 2.

According to a survey by economists, the U.S. economy created 73,000 new nonfarm jobs in July. This was below the 110,000 expected. The unemployment rate increased to 4.2%.

Brian Jacobsen is the chief economist of Annex Wealth Management. He said, "This report cannot be spruced up."

Last year, the Fed made a mistake by not cutting rates in July. They then cut to make up for it at their next meeting. The Fed will likely be forced to do the exact same thing again this year.

Money market traders increased their bets on a Fed rate cut at its meeting in September. According to LSEG, the markets indicate a 90% probability of a rate reduction next month. This compares with a 45% chance before the jobs report.

The softening labour market data came a day after Trump's executive order, which imposed tariffs of 10% to 41% for imports into the United States from a number of major trading partners. The tariffs on India's exports to the United States were 25%, Taiwan's at 20%, Thailand's at 19%, and South Korea's at 15%.

He also raised duties on Canadian products to 35%, from 25%, for all goods not covered by the U.S. Mexico-Canada trade agreement. But he gave Mexico a reprieve of 90 days from higher tariffs in order to negotiate a wider trade deal.

Wei Yao is the chief economist and research head in Asia for Societe Generale.

The MSCI broadest Asia-Pacific index outside Japan dropped 1.5% this week, making the total loss for the week approximately 2.7%.

The Nikkei index in Japan closed down 0.7%, the blue chips in China ended up 0.5% lower and Hong Kong’s Hang Seng lost more than 1 %.

The U.S. Dollar had found some support earlier on the fading prospect of imminent U.S. interest rate cuts but reversed its course after these data. The dollar index (which measures the currency in relation to six other currencies) was down by 1% for the day.

After the data, the yen strengthened to 148.71 dollars per yen. It had fallen below 150 for the first since April. The Bank of Japan kept interest rates unchanged on Thursday, and raised its expectations for near-term inflation. However, Governor Kazuo ueda was a bit dovish at the press conference.

The yield on two-year Treasury bills, which is sensitive to changes in expectations of interest rates, fell 17.5 basis points, to 3.7761%. Benchmark 10-year yields fell 9 basis points to 4.27%.

Oil prices continue to drop on commodity markets after Thursday's 1% decline. Brent crude oil prices fell by 0.3%, to $71.55 a barrel. U.S. crude dropped 0.1%, to $69.22 a barrel.

Spot gold increased 1.3% to $3.332 per ounce.

(source: Reuters)