US stocks edge lower at end of turbulent week

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US stocks slipped in early trading on Friday, at the end of a rollercoaster week that has seen global equities tumble sharply before clawing back much of their losses.

The benchmark S&P 500 was 0.2 per cent lower, dipping after its best day since November 2022 on Thursday. The tech-heavy Nasdaq Composite shed 0.4 per cent.

The moves suggest investors remain in cautious mood following a global sell-off sparked by weak US jobs figures a week ago that snowballed into a full scale rout on Monday.

Markets later rebounded, encouraged by better signals on the health of the labour market on Thursday as US unemployment claims fell faster than expected.

Although most major equity markets have reversed the majority of Monday’s losses, global markets remain below the levels seen before last week’s US jobs report first sparked concerns about the health of the world’s biggest economy.

“We are not completely out of the woods,” said Beata Manthey, head of European equity research at Citigroup.  

“The markets look more reasonably priced after the correction. However the fact that the positioning has not unwound fully yet means that even though the worst could be behind us, the market is extremely sensitive and vulnerable to any newsflow.”

European stocks edged higher, with the Stoxx Europe 600 index up 0.2 per in early afternoon trading. The Europe-wide benchmark is now marginally above the level it ended last week. France’s Cac 40 increased 0.1 per cent, while Germany’s Dax was down 0.1 per cent and the UK’s FTSE 100 0.2 per cent higher.

Earlier, Asian stocks rebounded, with Japan’s Topix closing 1 per cent higher, while South Korea’s Kospi and Hong Kong’s Hang Seng rose 1.2 per cent.

Friday’s relative calm followed data showing that new US applications for unemployment aid — seen as a proxy for job cuts — had fallen to their lowest level in a month.

Figures on Thursday gave a reading of 233,000 for initial state unemployment claims in the week ending August 3 on a seasonally adjusted basis, down from the previous week’s upwardly revised level of 250,000 — and below economists’ forecasts of 240,000.

“It was the jobs report last week that sent markets into a tailspin,” said Kristina Hooper, chief global market strategist at Invesco, so “it makes sense it was a labour market point that would calm markets” this week.

Japan had borne the brunt of Monday’s sell-off, with the Topix dropping 12 per cent in a single trading session. It rebounded the following day with the biggest one-day gain since 2008, as investors decided the decline had been wildly overdone. On Friday, the Topix was 3 per cent lower on the market close a week earlier.

“Volatility is still high, so we may continue to see market fluctuations [in Japan], said Naoya Fuji, equity strategist at Nomura, who emphasised that strong corporate earnings, share buybacks and better corporate governance had helped the Japanese market recover from Monday’s shock sell-off.