LONDON: A sharp slowdown in hiring in the United States sent stocks slumping Friday, but just briefly, as it raised concerns for the economic and interest rate outlook in the world’s top economy.
Wall Street stocks fell at the opening bell after following data showing the US economy added just 160,000 net new jobs in April, the lowest level this year, but the Dow had nearly recovered all the ground as midday approached.
European stocks also took a knock from the release of the nonfarm payroll data from the US Labor Department, but in the final minutes of trading values recovered.
London’s benchmark FTSE 100 index managed to finish with a small gain on 0.1 percent and Frankfurt’s DAX 30 index added 0.2 percent
But in Paris the CAC 40 lost 0.4 percent in value.
The jobs growth figure was well below expectations and pointed to the impact of the sharp slowdown of the US economy to a 0.5 percent growth rate in the first quarter of the year. Analysts had expected a modest slowdown from March to about new 207,000 jobs.
“US equities are lower in early action following a disappointing April nonfarm payroll report, which has the Street grappling with how the Fed will respond through monetary policy,” said analysts at brokerage Charles Schwab.
Meanwhile market analyst Patrick O’Hare said the report was “a real pickle for the Fed”.
The sour part of the report was the slowdown in job creation, but that was matched by the sweet news of a 0.3 percent increase in average hourly earnings.
“What isn’t too kosher for the market about that statistic is that it provides some rationale for a purportedly data-dependent Fed to raise the fed funds rate in June,” said O’Hare.
The dollar fell after the release of the data, indicating that currency traders initially saw less likelihood the Fed will move to increase interest rates at its next monetary policy meeting in June.
The euro rose to $1.1419 in late London trade, but was still down considerably from the eight-month high of $1.1616 it struck on Tuesday.
While lower interest rates and a weaker dollar are usually good for the stock market, investors have been troubled by slowing economic growth.
“Feeble economic data from China to Europe to the US has prompted the worst weekly slide in European stocks since mid-February,” said analyst Jasper Lawler at CMC Markets.
“Global economic and corporate earnings growth appears to have crested for the time being so current market valuations are being questioned.”
Confidence on trading floors has been sparse the past two weeks following disappointing data and announcements from China to the United States that tore a hole in hopes the world economy was showing signs of recovery.
On Friday, Asian stock markets mostly fell as lingering worries over global growth sent traders running from higher-risk assets.
– Key figures around 1530 GMT –
London – FTSE 100: UP 0.1 percent to 6,125.70 points (close)
Frankfurt – DAX 30: UP 0.2 percent at 9,869.9 (close)
Paris – CAC 40: DOWN 0.4 percent at 4,301.24 (close)
EURO STOXX 50: DOWN 0.4 percent at 2,939.24
New York – Dow: DOWN 0.04 percent at 17,654.24
New York – S&P 500: DOWN 0.2 percent at 2,046.28
New York – Nasdaq: DOWN 0.4 at 4,699.57
Tokyo: Nikkei 225: DOWN 0.3 percent at 16,106.72 (close)
Shanghai: DOWN 2.8 percent at 2,913.25 (close)
Hong Kong: DOWN 1.7 percent at 20,109.87 (close)
Euro/dollar: UP at $1.1419 from $1.1404 Thursday
Dollar/yen: DOWN at 106.71 yen from 107.26 yen
Copyright AFP (Agence France-Presse), 2016
Courtesy : BRecorder