London (AFP) – Optimism over better-than-expected jobs data in the United States proved short-lived, with stocks failing to hold onto gains as investors worried about delays to interest rate cuts. The US economy added 130,000 jobs last month, the Department of Labor said, nearly double the amount expected by analysts. Meanwhile, the jobless rate inched lower to 4.3 percent.
Briefing.com analyst Patrick O’Hare said the jobs report “is a positive sign for the US growth outlook, yet it may come with the cost of foregoing an additional rate cut by the Fed, at least in the near future.” He noted that yields on US government debt picked up after the report, indicating that investors see the chances for interest rate cuts diminishing. The US dollar also moved higher following the release, also an indication that investors see the prospect that interest rates will remain higher.
That helped Wall Street’s top stock indices move higher at the start of trading, but they slid into the red as morning trading progressed. “The potential for a delay to rate cuts seems to have weighed more heavily on investors as the full trading session got underway on Wall Street,” said Chris Beauchamp, chief market analyst at IG trading platform.
In Europe, London’s FTSE 100 gained more than one percent and set a new record high thanks to buoyant commodity prices. Paris and Frankfurt both ended lower. Asia’s main stock markets closed higher before the US jobs report. XTB research director Kathleen Brooks noted that the jobs data still raised concerns thanks to an annual revision that was also given Wednesday, which showed a benchmark reduction of 862,000 positions. “The revisions suggest there was virtually no jobs growth in the US last year,” she said.
The jobs figures follow a spate of weak economic data, the latest of which was sales reading on Tuesday that analysts said provided the Fed with room to consider cutting borrowing costs next month, having held in January after three reductions in a row. However, it also indicated there was unease among American consumers, who are the major driver of growth, and pointed to further weakness in the economy. The data had helped Wall Street stocks move higher on rate cuts optimism.
Traders also remain on guard about developments in the tech space as they worry that the hundreds of billions firms have pumped into artificial intelligence may not see any returns for some time. That was compounded Tuesday after Google’s parent Alphabet raised more than $30 billion in debt in less than 24 hours as it looks to ramp up its capabilities. News that the start-up Altruist Corp had rolled out a tax-strategy tool added to the sense of unease on trading floors, as it fanned concerns that the software will take business from mainstream firms.
In Europe on Wednesday, shares in Heineken climbed 4.2 percent after the Dutch brewer said it would axe 6,000 jobs amid falling beer shipments. TotalEnergies rose 3.1 percent as the French energy giant announced fresh share buybacks, helping offset news of a 17 percent drop in annual net profit. Siemens Energy shares jumped 8.4 percent on ballooning profits as AI boosts demand for electricity. On the downside, Dassault Systemes tumbled 20 percent after the French software group posted lower sales than expected.
World crude prices meanwhile rose on fresh Middle East tensions, with Israeli Prime Minister Benjamin Netanyahu expected Wednesday to push US President Donald Trump to take a tougher stance in nuclear talks with Iran.
– Key figures at around 1630 GMT –
New York – Dow: DOWN 0.2 percent at 50,090.18 points
New York – S&P 500: DOWN less than 0.1 percent at 6,938.92
New York – Nasdaq Composite: DOWN 0.4 percent at 23,014.57
London – FTSE 100: UP 1.1 percent at 10,472.11 (close)
Paris – CAC 40: DOWN 0.2 percent at 8,313.24 (close)
Frankfurt – DAX: DOWN 0.5 percent at 24,856.15 (close)
Hong Kong – Hang Seng Index: UP 0.3 percent at 27,266.38 (close)
Shanghai – Composite: UP 0.1 percent at 4,131.98 (close)
Tokyo – Nikkei 225: Closed for a holiday
Euro/dollar: DOWN at $1.1870 from $1.1899 on Tuesday
Pound/dollar: UNCHANGED at $1.3644
Dollar/yen: DOWN at 153.33 yen from 154.31 yen
Euro/pound: DOWN at 87.00 pence from 87.18 pence
Brent North Sea Crude: UP 1.5 percent at $69.85 per barrel
West Texas Intermediate: UP 1.7 percent at $65.02 per barrel.
burs-rl/rmb
© 2024 AFP
