U.S. nonfarm payrolls rose by just 57,000 in May, far below consensus and signaling a marked slowdown in the labour market that sent Treasuries higher, the dollar weaker and gold toward $4,200 as investors re‑priced the path for U.S. interest rates.
The soft jobs print hit risk appetite initially, but markets soon looked past the data: Asian equities recovered after the AI‑led rout, with mainland China and Japan up about 1%–1.5%, while European bourses gained roughly 0.4%. U.S. exchanges remain closed for the Independence Day holiday.
In Europe, German Chancellor Merz said his reform package — including tax and investment rule changes — could lift growth above 1%, part of a wider push to counter sluggish expansion. ECB Governing Council member Emmanuel Moulin said the bank is well placed to fight inflation following the latest rate increase, even as ECB President Christine Lagarde did not rule out an early political exit ahead of next year’s French presidential contest.
Auto markets are showing structural change: despite EU tariffs on Chinese models, Chinese cars have outsold Japanese rivals in Europe for the first time, highlighting intensifying competition in the continent’s vehicle market.
Currency markets were volatile. The yen, which recently hit a 40‑year low, strengthened as traders priced the risk of holiday intervention by Japanese authorities. Gold’s safe‑haven bid pushed the metal higher, while sovereign bonds rallied as rate‑cut odds eased on the weaker payrolls reading.
Investors will be watching whether the jobs slowdown is a blip or the start of broader cooling that could alter central‑bank plans and risk asset trajectories later in the summer.
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