Asian markets were muted on Thursday, with Japanese equities plunging to their lowest levels in three weeks as investors sought shelter. This drove the yen to a one-month high, as concerns about the US economy increased the likelihood that the Federal Reserve will lower interest rates.

Investors are searching for signs about the state of the US economy and labour market amid a week full of data, as markets are nervous over Tuesday's disappointing manufacturing numbers and Wednesday's conflicting labour statistics.

Japan's benchmark Nikkei fell more than 1% to its lowest level in three weeks amid the shaky mood, while tech-heavy Taiwan and South Korean equities ended the day marginally higher despite early advances.

Futures predicted that German DAX futures would open 0.3% down, FTSE futures down 0.25%, and European bourses would begin in the red.

Investors will be watching the U.S. services sector and jobless claims data on Thursday, but the big story of the week will be Friday's eagerly awaited nonfarm payrolls report for August.

The most definitive indications about the direction of the economy and whether the Fed would lower interest rates by a quarter or half a percentage point this month are anticipated to come from the report.

According to the CME FedWatch tool, markets are now pricing in a 44% possibility of a 50 basis point drop at the bank's meeting on September 17–18, up from 38% a day earlier.

From the three remaining Fed meetings this year, traders are now projecting 110 basis points of easing.

The most recent shift in market expectations occurred after data released on Wednesday revealed that job opportunities in the United States fell to a 3-1/2-year low in July, indicating a slowdown in the labour market.

The amount of interest rate cuts the Fed needs to maintain a strong labour market is now dependent on incoming economic data, according to San Francisco Fed President Mary Daly.

Analysts predict that growth names will struggle and that sentiment will remain shaky.

(Sources: investing.com, reuters.com)