US Jobs Slump Fuels Rate Cut Bets as Gold Hits Record High
Market Snapshot
- S&P 500: 6,481.50 (-0.32%)
- NASDAQ 100 (Futures): 23,781 (+0.41%)
- FTSE 100: 9,223 (+0.01%)
- Bitcoin (BTC): $112,090 (+0.82%)
- Ethereum (ETH): $4,330 (+0.51%)
- Gold: $3,618/oz (+0.89%)
- Oil (WTI): $63.36 (+1.56%)
- 10-Year US Treasury Yield: 4.088%
US Economy Weakens, Fuelling Fed Rate Cut Expectations
A dismal August jobs report has intensified expectations that the U.S. Federal Reserve will cut interest rates at its upcoming September meeting. Nonfarm payrolls in the U.S. rose by only 22,000 for the month, significantly below the 75,000 anticipated, marking one of the weakest hiring periods outside of a recession. Revisions to previous months’ data resulted in a net loss of 13,000 jobs, with June marking the first negative month for employment since 2020.
The unemployment rate edged up to a four-year high of 4.3%, and for the first time since April 2021, the number of unemployed workers now outnumbers available job openings. Following the report, futures markets priced in a near-certainty of at least a 25-basis-point rate reduction. The upcoming consumer price index (CPI) data is now in sharp focus. Concurrently, the average 30-year fixed mortgage rate saw its largest one-day decline since August 2024, falling to 6.29%.
Adding to fiscal concerns, Treasury Secretary Scott Bessent warned that if former President Donald Trump’s tariffs are struck down by the Supreme Court, the government may have to issue refunds on duties already collected.
Global Market and Regulatory Developments
Contrasting Fortunes in IPO Markets
While the U.S. initial public offering (IPO) market is preparing for a busy week, London is experiencing its most severe IPO drought since 1999. In the first half of 2025, London saw just five listings raise a combined £150 million, a 75% decline from the previous year, as 88 companies have delisted or relocated from the UK in 2024.
In contrast, the U.S. market is set for debuts from several companies, including fintech firm Klarna, which aims to raise $1.3 billion, and cryptocurrency exchange Gemini, seeking around $300 million.
UK Markets Supported by Oil as Fiscal Concerns Linger
The FTSE 100 index saw a modest rise, supported by a rebound in oil prices that benefited energy giants BP and Shell. Brent crude prices stabilised after OPEC+ announced a smaller-than-expected production increase.
In the UK bond market, gilt yields retreated from multi-decade highs following the weak U.S. jobs data. However, pressure remains on the UK government, with investors demanding higher premiums to hold UK debt due to fears of a potential £50 billion fiscal shortfall.
Nasdaq Tightens Rules on Speculative Stocks
Following a surge in manipulative trading schemes, Nasdaq is introducing stricter rules for small-cap stocks. The exchange has created an accelerated process to delist noncompliant companies, while also raising the minimum public float to $15 million and mandating a $25 million IPO floor size. The new regulations also require shareholder approval before companies can issue stock for the primary purpose of adding cryptocurrency to their balance sheets.
Corporate and Sector Highlights
Big Tech in Focus
Apple is scheduled to host its annual product event on Tuesday, where investors will watch closely for new iPhone features and potential price adjustments. Analysts suggest Apple may raise effective prices by eliminating smaller-storage models.
Meanwhile, Google's parent company, Alphabet, has largely avoided the most severe penalties in the government's antitrust case against its search business. The court imposed data-sharing remedies but did not force Google to sell its Chrome browser and allowed it to continue its lucrative default-search-engine payments to Apple, though this could be revisited.
Robinhood and AppLovin to Join S&P 500
Robinhood Markets (HOOD) and AppLovin are set to officially join the S&P 500 index. Robinhood will join on 22 September, replacing Caesars Entertainment. The announcement prompted a surge of over 7% in both companies' shares in pre-hours trading. The inclusion follows a strong financial quarter for Robinhood, which saw its Q2 2025 revenue increase by 45% year-over-year to $989 million.
Corporate Strategy Shifts
E-commerce veteran eBay is undergoing a significant technological transformation, leveraging artificial intelligence to regain competitive ground against rivals. The company is rolling out personalised shopping agents and using its three decades of transaction data to train its models, with its latest quarterly profit rising to $368 million from $224 million the previous year.
In the entertainment sector, studios are increasingly developing video game franchises into TV series and movies. Following the success of shows like HBO's "The Last of Us," Paramount recently announced plans for a live-action film tied to Activision’s "Call of Duty," the best-selling video game franchise in the U.S. for 16 consecutive years.
Sector Pressures
America’s farm equipment sector is facing significant headwinds as newly imposed tariffs drive up costs and squeeze margins. Stocks such as Deere ($DE) and AGCO ($AGCO) have come under pressure after tariffs pushed fertiliser prices up by 35%. John Deere warned of $600 million in added costs for fiscal 2025, while US tractor sales fell nearly 16% in early 2025.
Separately, shares of Tylenol maker Kenvue tumbled over 9% after a report that the Health and Human Services Secretary will link autism with Tylenol use by pregnant women. Kenvue stated it believes “there is no causal link” between the medication and autism.
Commodities and Geopolitics
Gold Hits Record High Amid Economic Uncertainty
Gold prices soared to an all-time high of $3,596.72 per ounce, a 43% year-over-year increase. The rally is being driven by expectations of a Federal Reserve rate cut, a softening U.S. labour market, a weaker dollar, and elevated geopolitical risks. Central banks have also continued to accumulate gold as they diversify away from dollar-denominated assets. Analysts are now projecting potential highs of up to $4,000 per ounce within the next year.
Geopolitical Tensions Escalate with Attack on Kyiv
Russia launched its most extensive aerial attack on Ukraine since the war began, firing 823 drones and missiles overnight. The assault included a direct hit on the main government complex in central Kyiv, killing at least four people. The record bombardment targeted 33 locations across the country, injuring 44. This significant escalation increases geopolitical risk, with potential impacts on energy markets and defence-related equities.
NOTE: This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).