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US stocks fell in choppy trading on Friday after new data gave a mixed picture of the state of the US jobs market.
Wall Street’s benchmark S&P 500 closed 0.3 per cent lower, notching a three-day losing streak, while the Nasdaq Composite fell 0.1 per cent. A mid-session rally, that pulled the two indices out of negative territory, petered out in the afternoon and ultimately left the pair lower for the week.
The US economy added 209,000 jobs in June, the Bureau of Labor Statistics’ closely watched employment report on Friday showed, undershooting expectations for the first time in 15 months. Figures for the previous two months were also revised lower.
However, a fall in the unemployment rate and higher than expected wage growth highlighted the resilience in the jobs market.
Job and wage growth are key drivers of inflation, and the labour market’s recent strength has left most investors expecting the Federal Reserve to lift rates again later this month.
John Briggs, global head of economics and market strategy at NatWest Markets, said the data “keeps the Fed on track for raising in July and keeps November on deck for a potential rise”, but said the market reaction could have been worse if the numbers were stronger.
Separate jobs data from the ADP Research Institute earlier this week prompted a sharper sell-off across stock and bond markets as investors feared the Fed would need to be more aggressive with future rate rises to bring inflation under control.
“The worry was that [Friday’s figures] would be a number like ADP and it would derail plans for this year completely,” Briggs added.
In Europe, the region-wide Stoxx 600 index closed 0.1 per cent higher, while France’s CAC 40 climbed 0.4 per cent and Germany’s Dax added 0.5 per cent.
Short-term bond prices also reversed some of their losses from the previous session. The two-year Treasury yield dipped 0.06 percentage points to 4.95 per cent on Friday after hitting a 16-year high in the previous session. Yields fall when prices rise.
The dollar, which tends to strengthen when investors expect US interest rates to go up, fell 0.9 per cent against a basket of six peer currencies following the jobs report.
Mohit Kumar, chief Europe financial economist at Jefferies, said: “The labour market data is likely to become much more important than inflation data going forward . . . the main question for the central banks and markets would be when the economy is starting to show reasonable signs of a slowdown.”
In Asia, equities extended declines from the previous day, with Hong Kong’s Hang Seng shedding 0.9 per cent, and China’s CSI 300 down 0.4 per cent. Japan’s Topix declined 1 per cent.
Adding to investors’ woes, the Hang Seng Mainland Bank index declined 1.2 per cent, edging towards its lowest point since November 2022. The sector, which had already suffered amid a weakening economy, fell further after Goldman Sachs earlier in the week downgraded some of its top lenders.
Additional reporting by Kate Duguid in New York
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