➤ Global shares retreat as latest U.S. payroll, manufacturing data reignites slowdown concerns.
➤ Pound falls as U.K. PM prepared to submit his final Brexit offer.
➤ Safe-haven assets gain.
U.S. equities extended losses from yesterday, after a slower pace of hiring in the U.S. private sector and disappointing U.S. manufacturing data reignited concerns about the U.S. economy.
Employment growth in the U.S. private sector slowed more than expected in September, as gains in August were revised down. Yesterday, the U.S. manufacturing sector unexpectedly contracted further in September as trade tensions weighed on new export orders, dragging stock markets lower yesterday.
S&P 500 and Nasdaq 100 retreated nearly 2% each around 1:15 p.m. ET on Oct. 2, having closed 1.2% and 0.8% lower the previous day.
"With no end in sight to trade uncertainty and the closely linked slowdown in global growth, we expect manufacturing to remain in the doldrums," with capital expenditure weighing on growth through the remainder of the year, Wells Fargo Securities said in a note.
Markets are now pricing in a nearly 74% probability that the U.S. Federal Reserve will cut rates again toward the end of the month, compared with a 53% chance a week ago.
"While the slowdown in manufacturing by itself will not push the U.S. into a recession, we do expect the knock-on effects to drive a broader slowdown, primarily via lower jobs growth," said Bill Diviney, senior economist at ABN Amro.
Meanwhile, separate data showed that the global manufacturing sector contracted for the fifth consecutive month, with the eurozone recording the fastest rate of decline in business conditions in nearly seven years.
European equities were in the red too, with the FTSE 100 closing 3.2%, its largest one-day decline since January 2016. Germany's DAX index shed 2.8% and France's CAC 40 retreated 3.1%.
A World Trade Organization decision on the long-running aircraft subsidy dispute between the U.S. and the EU also weighed on European markets. The trade ruling would pave the way for the U.S. to impose tariffs on $7.5 billion worth of goods from the EU, which has threatened to retaliate.
In Asia, Japan's Nikkei 225 index fell 0.5% and Hong Kong's Hang Seng index slipped 0.2%. Markets in China were closed Oct. 2.
The dollar spot index, which measures the currency against a basket of peers, reverse its gains from earlier in the day and was nearly flat.
Sterling lost 0.2% versus the dollar after U.K. Prime Minister Boris Johnson pledged no checks around the border in Northern Ireland as he prepared to submit his final Brexit offer to Brussels.
A European Commission spokesman previously denied reports that the EU was discussing a time limit for the Irish backstop, in what could have been a major concession to the U.K. as the Oct. 31 Brexit deadline approaches.
The euro depreciated 0.1% against the dollar, while the Japanese yen appreciated 0.3%.
In the bond market, Treasurys gained as 10-year yields fell 2 basis points to 1.620%. German Bunds with the same maturity gained 2 basis points.
Among commodities, Brent crude oil fell 0.9% to $58.35 per barrel on the ICE Futures Exchange. Gold jumped 0.9%.
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The day ahead:
10:30 a.m. ET — U.S. EIA petroleum status report
10:50 a.m. ET — U.S. Fed's John Williams speaks
