Morning Bid: Dollar slides as job worries mount

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 traders braced for benchmark revisions to employment data that could show up to one million fewer jobs than previously reported. The anticipated downgrade would underscore a deteriorating labor market, already under pressure from tariffs, immigration curbs and automation. The New York Fed’s August consumer survey saw hopes of finding a new job within three months at their lowest in over a decade, even as inflation expectations remained at 3% or above. Traders now see a 25-basis-point Fed cut next week as a certainty, with growing speculation around a 50-point move. Gold rose to a new record of $3,659.10 as the dollar fell and investors sought safety and a hedge against inflation ahead of the week’s U.S. consumer price report. * European equities were steady, supported by a surge in M&A activity. Anglo American jumped more than 7.0% in early trading after announcing a +$50 billion merger with Teck Resources to form Anglo Teck Plc. In Italy, Monte dei Paschi di Siena shares initially jumped more than 5.0% after securing 62% of its bid target Mediobanca, whose shares also rose. France’s CAC 40 rose modestly despite political uncertainty following Prime Minister Francois Bayrou’s ouster in a no-confidence vote, and French bond yields and yield premium over Germany ticked higher. * In Asia, Japan’s Nikkei and China’s mainland stocks both ended lower, the latter dragged down by the tech sector and a10% slide in chipmaker SMIC. But Hong Kong stocks hit four-year highs on U.S. rate cut expectations. Oil prices rose for a second day after OPEC+ announced a smaller-than-expected output hike of 137,000 barrels per day starting in October. The move comes amid speculation of tighter sanctions on Russian oil following 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.