New York (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. They quickly fell into the red, however, after separate data showed US consumers now expect inflation to jump. Employment and inflation are what the US Federal Reserve takes into account when setting interest rates.
President Donald Trump’s remarks on unspecified “reciprocal tariffs” also appeared to reignite concerns. Trump said at a press conference with Japanese Prime Minister Shigeru Ishiba that he was “probably meeting on that Monday or Tuesday,” saying that this would be “opposed to a flat-fee tariff” approach. “Today’s (jobs) 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 said. The Fed kept its rate unchanged last week, with chair Jerome Powell saying the central bank was in no “hurry” to adjust borrowing costs again.
Total US employment rose by 143,000 jobs last month, said 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 labour market data shifts the dial for the Fed,” said Kathleen Brooks, research director at XTB trading platform. But data released afterward subsequently showed US consumer sentiment fell to its lowest level in 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 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 profits 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 said he wanted borrowing costs to increase.
Key figures around 2145 GMT:
New York – Dow: DOWN 1.0 percent at 44,303.40 points (close)
New York – S&P 500: DOWN 1.0 percent at 6,025.99 (close)
New York – Nasdaq Composite: DOWN 1.4 percent at 19,523.40 (close)
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 to 38,787.02 (close)
Hong Kong – Hang Seng Index: UP 1.2 percent to 21,133.54 (close)
Shanghai – Composite: UP 1.0 percent to 3,303.67 (close)
Euro/dollar: DOWN at $1.0328 from $1.0387 on Thursday
Pound/dollar: DOWN at $1.2405 from $1.2436
Dollar/yen: DOWN at 151.43 yen from 151.47 yen
Euro/pound: DOWN at 83.24 pence from 83.50 pence
Brent North Sea Crude: UP 0.5 percent at $74.66 per barrel
West Texas Intermediate: UP 0.6 percent at $71.00 per barrel
© 2024 AFP
