Global financial markets faced a significant downturn on Friday, driven by robust U.S. employment data that raised concerns about prolonged high interest rates from the Federal Reserve. This unexpected economic performance resulted in considerable losses across various asset classes, including stocks, precious metals, and cryptocurrencies.
The latest report indicated that the U.S. economy added 172,000 jobs in May, far exceeding analysts’ forecasts of 80,000. Moreover, employment figures for the previous two months were revised upward by a total of 93,000 jobs, suggesting a resilient labor market amid ongoing inflationary pressures and elevated borrowing costs. This strong employment data pushed U.S. Treasury yields higher and bolstered the dollar, leading many investors to temper their expectations for any near-term monetary easing.
The yield on the benchmark 10-year U.S. Treasury rose above 4.5%, marking a significant milestone, while the U.S. dollar index ascended past 100 for the first time since April, intensifying investor jitters.
Wall Street closed sharply lower, reflecting widespread investor unease. The Dow Jones Industrial Average fell by 1.4%, the S&P 500 slipped 2.6%, and the Nasdaq Composite plunged more than 4%—the steepest drop since April 2025. The volatility index, known as the VIX or fear gauge, surged nearly 40%, highlighting the mounting anxiety in the market. Technology stocks experienced a renewed wave of selling, particularly after chipmaker Broadcom issued a disappointing revenue forecast for the third quarter, raising doubts about the sustainability of investments flooding into artificial intelligence sectors. The so-called “Magnificent Seven,” which comprises major tech firms like Nvidia, Alphabet, and Meta, all reported declines, with CNBC’s Magnificent Seven Index falling 3.7%.
The downturn extended beyond U.S. markets, as Asian indices mirrored the sell-off. South Korea’s technology-laden stock market saw a nearly 7% drop at one point, ultimately closing down 5.5%. Other major Asian markets also posted losses, with Japan’s Nikkei 225 falling 1.3%, Hong Kong’s Hang Seng Index declining 1.2%, and Shanghai’s Composite Index decreasing by 0.7%. European markets followed suit, with the pan-European Stoxx Europe 600 index dipping 0.3% to 622.66 points. Germany’s DAX 40 fell 0.8%, while France’s CAC 40 and Italy’s FTSE MIB 30 recorded losses of 0.3% and 0.6%, respectively. Spain’s IBEX 35 managed a slight gain of 0.4%, while the UK’s FTSE 100 remained largely unchanged. Türkiye’s BIST 100, on the other hand, slipped 1.3%.
In Europe, market sentiment was dampened by regulatory statistics that revealed a contraction in eurozone economic growth during the first quarter, primarily influenced by a sharp decline in Irish output due to multinational accounting adjustments.
The stronger dollar and rising bond yields exerted significant pressure on the precious metals market, leading to a dramatic fall in prices. Gold plummeted by over 3% to $4,327 per ounce—the lowest level observed since March. Silver plunged by 8.3% to $67.80 per ounce, while both palladium and platinum saw declines of around 6%, settling at $1,212 and $1,763 per ounce, respectively. In the cryptocurrency sphere, Bitcoin fell to an October 2024 low of $59,159 before partially recovering to about $60,910. Ethereum faced a drop of 7.4%, reaching $1,560, contributing to a total cryptocurrency market capitalization decline of 3.6% to $2.09 trillion.
Geopolitical uncertainties persisted with ongoing tensions surrounding Iran, adding further restraint to investor risk appetite. Despite continued conflicts in Lebanon and lack of progress in U.S.-Iran negotiations that could potentially reopen key energy export routes via the Strait of Hormuz, oil prices still edged downward. International benchmark Brent crude decreased over 2% to $92.80 per barrel, while U.S. benchmark West Texas Intermediate settled at $90.30.
