Global stock markets mixed as US jobs report beats estimates
Global stocks were mixed on Friday after the US added 379,000 non-farm payrolls in February, beating expectations for a 200,000 gain.
The news came amid fears of a rise in interest rates and a continued rotation out of growth stocks into the likes of industrials.
The FTSE 100 (^FTSE) fell sharply after opening but recovered losses in the afternoon thanks to a steep fall in the pound. It was also buoyed by oil, mining and banking stocks throughout the session.
London's benchmark index, however, closed 0.31% lower. In the eurozone, the CAC (^FCHI) tumbled 0.82% and the DAX (^GDAXI) was 0.97% lower after briefly turning green mid-afternoon.
Traders were left disappointed last night after Federal Reserve chair Jerome Powell did not indicate that the Fed might step up purchases of long-term bonds to hold down longer-term interest rates.
Richard Hunter, head of markets at Interactive Investor, said: “The Federal Reserve’s insistence that it believes these inflation moves are transitory was not enough to arrest a further spike in bond yields, as investors fretted that there were no plans to control the longer end of the yield curve.
“At the same time, the perceived threat of higher interest rates arriving earlier than expected washed through to the shares which could be most obviously affected by the resultant slowing of profits.”
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Across the pond the picture was also mixed, with the S&P 500 (^GSPC) dipping 0.24% at the European close, and the tech-heavy Nasdaq (^IXIC) falling 1.25%. The Dow Jones (^DJI) edged 0.14% higher.
"The cherry on top was news that the unemployment rate has continued to fall, shrinking to 6.2%. That’s the 11th straight month the figure has outperformed expectations," said Connor Campbell of SpreadEx.
"Initially investors couldn’t help but express their relief – so much so that the Dow Jones briefly shot up 1%, with the FTSE right there alongside it. However, as the session progressed, those inflationary fears started to creep in once again, cutting the Dow’s gains to just 0.2%."
He added: "It’s hard to see bond yields, interest rates and inflation dropping out of the conversation next week, not least because there’s an appearance from Andrew Bailey on Tuesday, the US inflation reading on Wednesday and the month’s ECB meeting on Thursday. And that’s not to mention the Democrats’ efforts to pass Biden’s $1.9 trillion stimulus package."
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Asian stocks hit a one-month low on Friday as rising US Treasury yields shook equity investors while sending the dollar to a three-month high, dragging the Japanese yen.
MSCI's broadest index of Asia-Pacific shares outside of Japan went to 684.52, the lowest since 1 February.
Japan's Nikkei (^N225) fell 0.23% while Chinese shares were also in the red. The Hang Seng (^HSI) fell 0.35% and the Shanghai Composite (000001.SS) dipped 0.04%.
Meanwhile, oil prices (BZ=F) added to big gains overnight, with Brent Crude hitting $68 a barrel, after the Organisation of Petroleum Exporting Countries (OPEC) and its allies agreed to mostly maintain their supply cuts in April as they await a more solid recovery in demand amid the pandemic.
An increase of 500,000 barrels a day was widely expected, however, Saudi Arabia agreed to maintain a voluntary 1 million barrels per day cut despite calls from some smaller producers to allow a modest loosening.
Saudi’s oil minister Prince Abdulaziz bin Salman, acknowledged that the market had improved since January, but wanted to “urge caution and vigilance,” adding that “…before we take our next step forward, let us be certain that the glimmer we see ahead is not the headlight of an oncoming express train.”
Oil prices are ahead by around 30% year to date, which has in turn propelled the share prices of important FTSE 100 constituents BP (BP.L) and Shell (RDSB.L) by 23% and 16%, respectively.
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