The Stoxx Europe 600 fell 1.3% in morning trade on Friday after stocks in Japan suffered their steepest drop in a month.
Futures pointed to a 0.2% opening loss for the S&P 500. Changes in futures do not necessarily reflect market moves after the opening bell.
A Bank of Japan survey published on Friday showed business confidence fell to its lowest in three years, amid soft external demand and a stronger yen, despite aggressive easing measures by the country’s central bank.
Japan’s Nikkei Stock Average ended 3.6% lower, spurring losses in Asia and overseas. Some investors compared the soft start to the quarter to the first trading day of the year, when soft economic data from China sparked steep losses in global markets.
“It’s a bit like coming in at the start of January and seeing the selloff all over again,” said William Hamlyn, investment analyst at Manulife Asset Management. What’s different this time, however, is that there’s been quite a good rally recently, the tone from emerging markets has improved, and the Federal Reserve has signalled a much slower path for raising U.S. interest rates, he said.
Investors were also looking ahead to the U.S. jobs report due later in the day. Economists expect a rise in nonfarm payrolls of 213,000 and the unemployment rate to hold at 4.9%.
Analysts said the report would have to come in significantly above expectations to lift the dollar, following Federal Reserve Chairwoman Janet Yellen’s soft tone on U.S. interest rates this week.