Dollar slides as job worries mount

By Mike Dolan

LONDON (Reuters) – What matters in U.S. and global markets today

By Mike Dolan, Editor-At-Large, Finance and Markets

Global stocks pushed higher on Tuesday as U.S. rate cut fever built and a wave of European merger activity helped offset the week’s political upheavals in France and Japan.

With U.S. long-term bond yields sliding to four-month lows on Monday ahead of the week’s big debt auctions, the dollar fell to a seven-week low as expectations of big downward revisions to U.S. jobs data through last March reinforced bets on deeper Federal Reserve rate cuts. U.S. stock futures nudged higher, after the tech-heavy Nasdaq clocked a record close on Monday. Gold extended its record-breaking rally.

* The dollar fell to its weakest since July 24 as tradersbraced for benchmark revisions to employment data that couldshow up to one million fewer jobs than previously reported. Theanticipated downgrade would underscore a deteriorating labormarket, already under pressure from tariffs, immigration curbsand automation. The New York Fed’s August consumer survey sawhopes of finding a new job within three months at their lowestin over a decade, even as inflation expectations remained at 3%or above. Traders now see a 25-basis-point Fed cut next week asa certainty, with growing speculation around a 50-point move.Gold rose to a new record of $3,659.10 as the dollar fell andinvestors sought safety and a hedge against inflation ahead ofthe week’s U.S. consumer price report. * European equities were steady, supported by a surge in M&Aactivity. Anglo American jumped more than 7.0% in early tradingafter announcing a +$50 billion merger with Teck Resources toform Anglo Teck Plc. In Italy, Monte dei Paschi di Siena sharesinitially jumped more than 5.0% after securing 62% of its bidtarget Mediobanca, whose shares also rose. France’s CAC 40 rosemodestly despite political uncertainty following Prime MinisterFrancois Bayrou’s ouster in a no-confidence vote, and Frenchbond yields and yield premium over Germany ticked higher. * In Asia, Japan’s Nikkei and China’s mainland stocks bothended lower, the latter dragged down by the tech sector and a10% slide in chipmaker SMIC. But Hong Kong stocks hit four-yearhighs on U.S. rate cut expectations. Oil prices rose for asecond day after OPEC+ announced a smaller-than-expected outputhike of 137,000 barrels per day starting in October. The movecomes amid speculation of tighter sanctions on Russian oilfollowing a major airstrike on Kyiv.

In today’s column, I discuss whether the ECB’s complex structure may shield it from the political pressures facing other central banks – and whether that’s a good thing.

Story Continues

Today’s Market Minute

* French President Emmanuel Macron is seeking his fifth prime minister in less than two years after opposition parties united to kick out centre-right Prime Minister Francois Bayrou over his unpopular plans for budget tightening.

* London-listed miner Anglo American said on Tuesday it has agreed a merger with Canada’s Teck Resources in what would be the biggest mining sector M&A deal in more than a decade.* Elon Musk’s SpaceX said on Monday it will buy wireless spectrum licenses from EchoStar for its Starlink satellite network for about $17 billion, a major deal crucial to expanding Starlink’s nascent 5G connectivity business.

* Tesla’s U.S. market share dropped to a near eight-year low in August as buyers chose electric vehicles from a growing stable of rivals over the aging lineup offered by CEO Elon Musk’s company, according to data from research firm Cox Automotive shared exclusively with Reuters.

* Long-term bond yields spiked globally last week, stoking fears about the ability of governments to finance their deficits. Sensible fiscal policies in Europe may stop this “doom loop” in 2026, writes Panmure Liberum investment strategist Joachim Klement, but there is little reason to believe the U.S. will be so lucky.

* The recent wave of Ukrainian drone attacks on Russian oil refineries and export facilities could boost global refining profit margins – particularly those in the U.S. – just as the peak summer demand season fades. Read the latest from ROI energy columnist Ron Bousso.

Chart of the day:

The New York Fed’s August survey of consumers showed expectations of finding a new job within three months of losing one at the lowest in over a decade, while inflation expectations over one and three years were 3% or above.

Today’s events to watch

* U.S. NFIB August small business survey (6:00 AM EDT), U.S.annual payroll revisions (10:00 AM EDT); Mexico August inflation(8:00 AM EDT) * Bank of England Deputy Governor Sarah Breeden and Bank ofFrance Governor Francois Villeroy de Galhau speak at BISconference in Basel * U.S. corporate earnings: Oracle, Synopsys * U.S. Treasury sells $58 billion of 3-year notes

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(The opinions expressed here are those of the author, a columnist for Reuters)

(By Mike Dolan; Editing by Helen Popper)

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