London (AFP) – US and European shares fell Friday, with a cooler US jobs report and higher inflation expectations capping the end of a volatile week marked by concerns over a trade war. Official data showed the United States added fewer jobs than expected in January while unemployment ticked down.
The jobs data missed expectations, but Wall Street’s three main indexes initially rose, only to quickly fall into the red after separate data showed US consumers now expect inflation to jump. Employment, along with inflation, are what the US Federal Reserve takes into account when setting interest rates. “Today’s NFP data does not show a large enough divergence from expectations to shift what is expected to be the Fed’s next rate move,” said Jochen Stanzl, chief market analyst at CMC Markets. “Still, the Fed is expected to cut the Fed Funds rate twice this year and today’s data does not really give a hint into when the first cut will be,” Stanzl added.
The Fed kept its rate unchanged last week, with chair Jerome Powell stating that the central bank was in no “hurry” to adjust borrowing costs again. Total US employment rose by 143,000 jobs last month, according to the Labor Department, significantly lower than the revised 307,000 figure in December. The January figure was also below an analyst consensus estimate of 155,000 according to Briefing.com. “We do not think that the labor market data shifts the dial for the Fed,” said Kathleen Brooks, research director at XTB trading platform.
However, data released afterwards showed US consumer sentiment fell last month to its lowest level since July, with survey respondents reporting feeling less confident and more concerned about inflation. Year-ahead inflation expectations rose to 4.3 percent, up a full percentage point from a month earlier. “Such a substantial one-month rise of one percentage point or more has occurred only five times in the past 14 years,” noted Axel Rudolph, Senior Technical Analyst at online trading platform IG.
The jump in inflation expectations follows a turbulent week for stock markets and currencies after US President Donald Trump imposed tariffs on China. The US leader also warned that the European Union would face tariffs “pretty soon” while he delayed duties on Canada and Mexico at the 11th hour.
Investors were also tracking corporate results. In Frankfurt, Porsche shares slumped after the luxury carmaker’s forecasts for the year ahead disappointed expectations. Gold was another shining performer this week, reaching a new all-time peak as the precious metal benefits from its status as a haven investment. Hong Kong and Shanghai stock markets closed solidly higher thanks to gains across technology firms. Chinese startup DeepSeek has shaken up the race for AI supremacy, spooking US tech companies. Tokyo stocks were weighed by a stronger yen, which picked up this week after Bank of Japan board member Naoki Tamura expressed a desire for borrowing costs to increase.
Key figures around 1630 GMT:
New York – Dow: DOWN 0.6 percent at 44,484.08 points
New York – S&P 500: DOWN 0.6 percent at 6,044.37
New York – Nasdaq Composite: DOWN 1.0 percent at 19,586.56
London – FTSE 100: DOWN 0.3 percent at 8,700.53 (close)
Paris – CAC 40: DOWN 0.4 percent at 7,973.03 (close)
Frankfurt – DAX: DOWN 0.5 percent at 21,787.00 (close)
Tokyo – Nikkei 225: DOWN 0.7 percent at 38,787.02 (close)
Hong Kong – Hang Seng Index: UP 1.2 percent at 21,133.54 (close)
Shanghai – Composite: UP 1.0 percent at 3,303.67 (close)
Euro/dollar: DOWN at $1.0339 from $1.0387 on Thursday
Pound/dollar: DOWN at $1.2405 from $1.2436
Dollar/yen: DOWN at 151.18 yen from 151.47 yen
Euro/pound: DOWN at 83.35 pence from 83.50 pence
Brent North Sea Crude: UP 0.3 percent at $74.52 per barrel
West Texas Intermediate: UP 0.5 percent at $70.93 per barrel.
© 2024 AFP
