Nasdaq 100 gains as weak labour data fuels rate-cut bets
THE Nasdaq 100 rose on Thursday (Sep 4), closing 218.17 points, or 0.93 per cent higher, at 23,633.01, as investors digested weaker-than-expected labour market data ahead of Friday’s closely watched nonfarm payrolls (NFP) report.
Private-sector job growth slowed to 54,000 in August, missing forecasts of 65,000, while weekly jobless claims hit their highest level since June. The ISM services index came in stronger overall, but hiring within the sector contracted for a third consecutive month.
The data added to signs of labour market weakness, reinforcing expectations that the US Federal Reserve will cut rates at its September meeting. According to the CME FedWatch Tool, traders now assign a 97 per cent probability of a rate reduction, up from 91.7 per cent earlier in the week.
Market attention has turned to Friday’s non-farm payroll (NFP) report on Sep 5, which was lower than expectations. Further evidence of labour stress is likely to bolster the case for deeper cuts.
The NFP report, which showed a significant slowdown from July, might prove pivotal in shaping expectations for monetary policy ahead of this month’s Federal Reserve meeting.
Fed chair Jerome Powell’s remarks at Jackson Hole on Aug 22 highlighted two critical dynamics shaping the policy outlook. He appeared less concerned about long-term inflationary risks, suggesting recent price pressures, particularly those linked to tariffs, are transitory and unlikely to trigger a renewed inflationary cycle.
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He also emphasised the fragile balance in the labour market, where slowing supply and demand have created a “precarious equilibrium”. This remains unstable and could tip quickly into higher unemployment if momentum weakens.
With the Fed’s focus now back on labour market conditions, investors will be relieved with Friday’s jobs report, which strengthened the case for the central bank to continue on the path for rate reduction for the final months of 2025.
On the technical side, the Nasdaq 100 has bounced off the lower boundary of its rising channel and is trading above the 20-day SMA, aiming for the previous high near 24,000. On the downside, the rising trendline and 50-day SMA may provide support, with a break below them opening the way to 23,000 or last month’s low at 22,666.
The writer is equities specialist at Phillip Securities Research
