GLOBAL MARKETS-Tempered expectations of Fed rate cut sink stocks globally

(Updates through afternoon U.S. trading)
By David Randall
NEW YORK, July 5 (Reuters) - A strong U.S. jobs report that
tempered expectations of an aggressive interest rate cut by the
Federal Reserve later this month and weak economic data in
Germany helped push global stock indices lower on Friday after
hitting record highs earlier this week.
Yields on benchmark 10-year Treasury notes rose back above
2.0% after hitting their lowest since November 2016 on
Wednesday.
Nonfarm payrolls increased by 224,000 last month as
government employment rose by the most in 10 months, the U.S.
Labor Department reported. The better-than-expected showing reduced the likelihood the
Fed will cut interest rates at its next meeting later this
month. Expectations of an equity-friendly rate cut helped push
the S&P 500 to record highs earlier this week.
"Obviously, this was a key report for the Fed as well in
determining their path in the near term, and with markets fully
pricing in a July rate cut and several thereafter, the
stronger-than-expected report is likely to throw cold water on
those fairly dovish expectations," said Candice Bangsund, asset
allocation manager at Fiera Capital.
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
0.56%.
On Wall Street, the Dow Jones Industrial Average .DJI fell
57.29 points, or 0.21%, to 26,908.71, the S&P 500 .SPX lost
10.91 points, or 0.36%, to 2,984.91 and the Nasdaq Composite
.IXIC dropped 30.23 points, or 0.37%, to 8,140.00.
Market volume in the U.S. was light due to the
holiday-shortened week.
The losses in the U.S. market followed broad dips in
European equities after German data showed industrial orders had
fallen far more than expected in May, and a warning from the
economy ministry that this sector of Europe's largest economy
was likely to remain weak in the coming months.
"Devastating new orders data just undermined any hopes for
an industrial rebound. We are starting to lose our optimism,"
said Carsten Brzeski, chief economist at ING Germany.
"Combined with the weakest June performance of the labor
market since 2002 and disappointing retail sales, today's new
orders wrap up a week to forget for the German economy. The fear
factor is back."
The pan-European STOXX 600 index .STOXX lost 0.72%.
Benchmark 10-year notes US10YT=RR last traded 24/32 lower
in price to yield 2.0373%, from 1.955% late on Wednesday.
The dollar index .DXY rose 0.57%, with the euro EUR=
down 0.58% to $1.1219.
Brent crude futures LCOc1 , the international benchmark for
oil prices, gained 1.5% to $64.26 per barrel while U.S. crude
CLc1 rose 0.4% to $57.58. O/R

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