US jobs data knocks stocks off record pedestal
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LONDON, Oct 6 — US stocks slid off record highs today after data showed US payrolls contracted for the first time in seven years last month.
Although the 33,000 drop in non-farm jobs was attributable to major hurricanes that struck Texas and Florida, analysts had still expected the US economy to add 75,000 jobs.
Wall Street stocks opened lower, coming off record highs yesterday for all three indices including the S&P 500 hitting its longest winning streak since 1997 with six consecutive gains.
The Dow dipped 0.1 per cent in opening trading, with the S&P 500 giving up 0.2 per cent.
“US stocks are slipping in early action, with the September nonfarm payroll report showing jobs declined for the first time since 2010 due to the impact of the hurricanes, but the unemployment rate fell surprisingly and wage growth easily topped forecasts,” said analysts at Charles Schwab brokerage.
The unemployment rate dropped another two tenths of a point to 4.2 per cent, its lowest level since February of 2001. Average hourly earnings — which can point to looming inflation — rose by 0.5 per cent, beating expectations of 0.3 per cent.
“Treasury yields and the US dollar are higher on the data, which appears to be solidifying December Fed rate hike expectations,” they added.
The dollar had pushed higher yesterday as dealers contemplated Trump’s tax cuts passing through Congress and remarks from top Federal Reserve officials indicating another US interest rate hike before the end of the year, with the possibility of more in 2018.
Meanwhile the euro was dented partly by Spain’s ongoing crisis with Catalonia threatening to break away, which has seen the single currency sink to below US$1.17 — having topped US$1.20 two weeks ago.
Madrid stocks were down 0.3 per cent in afternoon trading.
“Cracks are appearing in Catalonia’s move to independence, but until the notion of independence is dispelled, contagion risk remains,” said Jasper Lawler, head of research at London Capital Group.
London’s FTSE 100 was able to buck the trend with a slight gain as a weaker pound lifted share prices of multinationals. On the downside, EasyJet lost 3.5 per cent to 1,239 pence as a trading update failed to impress investors.
The pound faced renewed pressure as the future of British Prime Minister Theresa May, whose much-anticipated Conservative Party conference speech this week ended in disaster, is called into question.
There are worries that her removal could spark fresh uncertainty in Britain as it negotiates with the European Union over leaving the bloc.
Yesterday’s rally in New York extended into Asia, where Tokyo’s Nikkei ended 0.3-per cent higher at the highest level for more than two years, while Hong Kong added 0.3 per cent to finish at a peak not seen since the end of 2007.
Key figures around 1330 GMT
London – FTSE 100: UP 0.2 per cent at 7,520.47 points
Frankfurt – DAX 30: DOWN 0.06 per cent at 12,960.82
Paris – CAC 40: DOWN 0.3 per cent at 5,364.25
Madrid – IBEX 35: DOWN 0.3 per cent at 10,189.50
EURO STOXX 50: DOWN 0.2 per cent at 3,605.45
New York – DOW: DOWN 0.1 per cent at 22,745.71
Tokyo – Nikkei 225: UP 0.3 per cent at 20,690.71 (close)
Hong Kong – Hang Seng: UP 0.3 per cent at 28,458.04 (close)
Shanghai – Composite: Closed for a public holiday
Euro/dollar: DOWN at US$1.1694 from US$1.1706 at 2130 GMT Thursday
Dollar/yen: UP at 113.31 yen from 112.83 yen
Pound/dollar: DOWN at US$1.3046 from US$1.3115
Oil – Brent North Sea: DOWN US$1.00 at US$56.00 per barrel
Oil – West Texas Intermediate: DOWN US$1.30 at US$49.49