Berliner Tageblatt - Strong US jobs data weakens Wall Street stocks

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Strong US jobs data weakens Wall Street stocks
Strong US jobs data weakens Wall Street stocks / Photo: © GETTY IMAGES NORTH AMERICA/AFP/File

Strong US jobs data weakens Wall Street stocks

Data showing that hiring unexpectedly accelerated in the United States last month gave a cold shower to hopes for an interest rate cut early next year, sending bond yields and the dollar higher and Wall Street stocks lower.

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The economy added 199,000 jobs last month, the Department of Labor said. That was more than the 150,000 jobs it added in October and the analyst consensus of 175,000.

The jobless rate ticked down to 3.7 percent and wage growth heated up to 0.4 percent.

Investors had been looking forward to the data to get a better indication whether the Federal Reserve might cut borrowing costs in early 2024 as inflation cools.

Hopes for lower rates after a succession of hikes were behind last month's rally for global equities, with a rate cut already largely priced in early 2024.

The "data could rock the boat in markets", said Callie Cox at eToro. "Stocks and crypto have rallied hard on the rate cut trade, and the hopes have gone a little too far."

Wall Street's main indices slid at the opening bell, with the Dow shedding 0.1 percent, while the yield on 10-year US government bonds rose as did the dollar.

Cox said the rise in hiring was in part a rebound following the end of the autoworkers' strike in October.

"All in all, this report should make you less anxious about a recession," she said. "The job market is still in a good place, and wage growth is still coming down. That's what the Fed wants to see."

Briefing.com analyst Patrick O'Hare said the data "didn't necessarily support the market's notion that the Fed will cut rates sooner than later".

But he said the market could end up going either way, as investors could be reassured a recession is not on the horizon.

"Today, therefore, could give us a glimpse of whether the market sees good economic news as good news for earnings or good economic news as bad news for the rate-cut appetizer it has been feasting on the last five weeks," O'Hare said.

European equities held onto gains in afternoon trading, with Frankfurt's DAX flirting with its record high.

Asian markets mostly ended higher Friday but Tokyo dropped more than one percent as the yen continued to rise against the dollar, hurting exporters.

The currency surged almost four percent at one point Thursday after Bank of Japan chief Kazuo Ueda said handling monetary policy "will become even more challenging from the year-end and heading into next year".

The remarks suggested the bank was on the brink of shifting away from its long-running ultra-loose monetary policy, notably an absence of interest-rate hikes, put in place to kickstart growth.

The comments were made a day after deputy governor Ryozo Himino played down the adverse consequences of such a move on the economy.

Elsewhere, oil prices jumped about two percent after tanking earlier in the week on slowing demand concerns, also as China's economy struggles.

State broadcaster CCTV on Friday reported President Xi Jinping saying that China's economic recovery was "still at a critical stage", as sluggish domestic activity and property sector woes drag on a post-pandemic rebound.

- Key figures around 1430 GMT -

New York - Dow: DOWN 0.1 percent at 36,072.25 points

London - FTSE 100: UP 0.5 percent at 7,553.22

Paris - CAC 40: UP 1.0 percent at 7,503.78

Frankfurt - DAX: UP 0.5 percent at 16,713.11

EURO STOXX 50: UP 0.8 percent at 4,509.17

Tokyo - Nikkei 225: DOWN 1.7 percent at 32,307.86 (close)

Hong Kong - Hang Seng Index: DOWN 0.1 percent at 16,334.37 (close)

Shanghai - Composite: UP 0.1 percent at 2,969.56 (close)

Dollar/yen: UP at 144.40 yen from 144.10 yen on Thursday

Euro/dollar: DOWN at $1.0739 from $1.0797

Pound/dollar: DOWN at $1.2510 from $1.2587

Euro/pound: UP at 85.84 pence from 85.76 pence

West Texas Intermediate: UP 1.9 percent at $70.67 per barrel

Brent North Sea crude: UP 2.0 percent at $75.55 per barrel

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J.Bergmann--BTB