NEW YORK/LONDON: Global equity markets were volatile on Friday on a weak US labor market report and Treasury yields rose as investors still expect the Federal Reserve to ramp up its massive bond purchases early next month. will start reducing.
The yield on the benchmark 10-year US Treasury note climbed above 1.6% for the first time since June, the dollar eased and shares on Wall Street tumbled as technology and other high-growth stocks sold off, while energy and Financial benefit received.
The US economy created the fewest jobs in nine months in September amid increased school hiring and staff shortages. Some attributed that at least partly to the jobs lost after vaccine requirements were implemented to combat the delta variant boom.
The unemployment rate fell to an 18-month low of 4.8 percent.
“The headline weakness hides an otherwise more robust job market than we are currently seeing,” said Russell Price, chief economist at Ameriprise Financial Services Inc. in Troy, Michigan. “It relates to the mandate for vaccinations for people who lost their jobs because of it.”
MSCI’s All-Country World Index dropped 0.05% but rose 0.7% for the week.
The Europe-wide STOXX Europe 600 index closed 0.28% in shares, still marked its best week in two months as fears of rising inflation calmed.
Gains in oil and bank stocks in Europe were more than offset by a 1.4% fall in tech stocks, as rising bond yields dampened the appeal of the high-growth sector, a story also observed on Wall Street. [US/] [O/R]
The Dow Jones Industrial Average slipped 0.03%, the S&P 500 fell 0.19% and the Nasdaq Composite fell 0.51%, pulling lower after Wells Fargo cut its price target on Comcast Corp, which fell 4.7%.
All three indices rose for the week.
September’s jobs report was the last before the November 2-3 meeting of Fed policymakers, when markets expect to begin tapering or announce a timeline.
Kathy Lien, managing director of BK Asset Management in New York, said the Fed has made it clear that a blockbuster job report in November is not needed.
“When you’re seeing a slight drop in the dollar, I think the Fed is on track,” she said.
The dollar index, which tracks the greenback versus a basket of six currencies, fell 0.076% to 94.105.
The euro was up 0.19% at $1.1572, while the Japanese yen was up 0.56% at $112.2200.
The sideways market is due for an information zero ahead of the start of third-quarter earnings season next week, said Thomas Hayes, president and managing member of Great Hill Capital LLC.
“There’s been some uncertainty with Delta over the past few weeks, so the market is really looking forward to estimates,” Hayes said.
Global stock indexes turned positive for the week following Thursday’s rally, initially as broadly rising energy prices and despite the prospect of a hike in interest rates too soon to tackle inflation upset investors.
The US Senate approved legislation to raise the federal government’s debt limit and avoid a historic default surge risk sentiment, though it only withheld a decision on a longer-term measure until early December.
In Asia, major stock benchmarks were supported by progress in Chinese blue chips, which rose 1.31% as trading resumed after the week-long National Day holiday. The sentiment improved with a survey from the private sector, showing that China’s services sector returned to growth in September.
Chinese stocks have been battered over the past three months by regulatory clamp-downs, property sector turmoil related to China Evergrande’s huge debt and the recent power outages. But some investors are starting to see a buying opportunity.
Oil prices rose more than 4% in the week as the global energy crisis hit their highest level since 2014 as large global electricity users struggle to keep up with demand.
Brent crude rose 0.54% to $82.39 a barrel. US crude closed 1.34% higher at $79.35 a barrel.
US gold futures were down 0.1% at $1,757.40 an ounce.
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