European stocks slip lower; risk sentiment fragile ahead of payrolls

Investing.com – European stock markets drifted lower Thursday, trading in a subdued manner ahead of the key monthly US jobs report amid renewed concerns over the prospects for the world’s largest economy.

At 03:05 ET (07:05 GMT), the in Germany traded flat, the in France fell 0.4% and the FTSE 100 in the U.K. dropped 0.1%.

Sentiment remains fragile ahead of payrolls

The main European indices traded in a tight range Thursday, but sentiment remains fragile ahead of Friday’s crucial US release as investors look for clues about how aggressively the Federal Reserve may look to cut interest rates later in the month.

Fed Chair Jerome Powell has flagged it is time to start reducing interest rates, and many in the markets expect the process to begin with a 25-basis point cut at the Sept. 17-18 meeting.

Weak U.S. manufacturing data earlier in the week exacerbated concerns over the economic outlook, while Wednesday’s bigger-than-expected drop in showed the labor market is at risk of a sharper weakening.

The JOLTS report “adds to the body of evidence that the labor market is not only looser than pre-pandemic but is continuing to cool and potentially now at a faster pace,” Citi analysts said in a note.

Friday sees the release of the monthly jobs report, which is expected to show around 164,000 new jobs and a 4.2% unemployment rate in August. 

Eurozone retail sales due

Back in Europe, rose in July by 2.9% on the previous month, better than the drop of 1.6% expected, and followed on from revised 4.6% growth the prior month.

This was a rare piece of good news, especially after data released earlier this week suggested manufacturing activity remains weak in Europe in August.

for July are expected later in the session, and are expected to show a small improvement after a drop of 0.3% the prior month. 

The European Central Bank cut interest rates in June, and is expected to reduce interest rates again later this month.

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Crude edges higher after US stockpiles draw

Crude prices edged higher Thursday, after plunging to multi-month lows, on reports major producers may delay an output increase as well as falling US inventories.

By 03:05 ET, the contract gained 0.3% to $72.89 per barrel, after falling in the previous session to the lowest close since June 27, 2023, while futures (WTI) traded 0.3% higher at $69.39 per barrel, after dropping on Wednesday to the lowest settlement since Dec. 11.

Data found support after data showed U.S. crude oil fell by 7.431 million barrels last week, more than the 1 million barrel draw expected.

The Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, is discussing delaying its oil output increase scheduled to start in October, Reuters reported on Wednesday, citing sources.