ZCZC
BCN-10
EUROPE-MARKETS
Dollar labours higher on jobs report,stocks drop
LONDON, Feb 3, 2018 (BSS/AFP) – Data showing strong job creation and wage
gains in the United States fed expectations of interest rate hikes, sending
the dollar and US bond yields higher on Friday, while stocks slumped.
With 200,000 jobs added to the US economy last month, more than analysts
had forecast, expectations are mounting that the Federal Reserve will push
forward with more intest rate hikes.
The Fed’s concerns about tepid inflation will likely be salved by data
showing wage growth of 2.9 percent, the largest 12-month increase in more
than nine years.
The greenback snapped higher after the announcement, as did the yield on
US government bonds. Bloomberg reported the rate of return on 10-year US
Treasury hit a four-year high of 2.84 percent.
“Rising wages are a good thing for the economy, but what is good for the
economy isn’t always good for the stock market if it drives up rate-hike
expectations,” said Briefing.com analyst Patrick O’Hare.
– Jobs crutch for dollar –
“The dollar clearly needed support this week, and January’s impressive US
jobs data has come to the rescue,” said research analyst Lukman Otunuga at
FXTM online currency brokerage.
But analyst Craig Erlam downplayed the size of the gains by the dollar
gains.
“Not an overly large move in USD when you consider size of beat on
earnings and a small beat on NFP. Sign of USD unpopularity right now?” he
tweeted.
The dollar has been struggling against its major peers recently.
With dealers betting on tighter monetary policy at the European Central
Bank and preferable terms for Britain when it leaves the European Union, the
euro and pound have been making gains against the dollar the past couple of
weeks.
MORE/HR/0955
ZCZC
BCN-11
EUROPE-MARKETS 2 LAST LONDON
– Goodbye Goldilocks? –
Meanwhile, stocks fell, as higher interest rates are not usually good for
consumers and companies.
The Dow was down 1.3 percent in late morning trading.
London Capital Group’s Jasper Lawler said rising bond yields had put stock
markets on high alert.
“A three percent 10-year treasury yield is the big kahuna for a larger
stock market correction,” he wrote in a client note.
“Rising interest rates mean the ‘Goldilocks’ scenario for markets is
warming up to ‘daddy bear’,” he added.
With the Federal Reserve already in the midst of a rate-raising cycle —
it is now tipped to hike at least three times this year — there is
increasing concern about the impact on growth and world markets.
Eurozone stock markets also slumped on Friday, with the Frankfurt and
Paris stock markets down over 1.5 percent.
Outside the eurozone, London’s losses were less acute at 0.6 percent.
“The global equity selloff has gathered pace, with European markets taking
the brunt of the selling,” said Chris Beauchamp, chief market analyst at IG
trading group.
– Bitcoin heads down –
Asian markets swung Friday with some recovering from early losses but
traders remain on edge as over the rise in US Treasury yields.
Bitcoin fell below $8,000 for the first time since November after India
said it did not consider cryptocurrencies legal tender and will look to
eliminate their use as payment systems.
The remarks come after regulators in South Korea, China and Russia
recently said they would clamp down on virtual currencies.
Bitcoin’s level compares with its record high around $19,500 seen in mid-
December at the height of a crypto-boom. Some analysts warn it could fall to
$6,000.
– Key figures around 1630 GMT –
London – FTSE 100: DOWN 0.6 percent at 7,443.43 points (close)
Frankfurt – DAX 30: DOWN 1.7 percent at 12,785.16 (close)
Paris – CAC 40: DOWN 1.6 percent at 5,364.98 (close)
EURO STOXX 50: DOWN 1.5 percent at 3,524.97
New York – DOW: DOWN 1.3 percent at 25,862.19
Tokyo – Nikkei 225: DOWN 0.9 percent at 23,274.53 (close)
Hong Kong – Hang Seng: DOWN 0.1 percent at 32,601.78 (close)
Shanghai – Composite: UP 0.4 percent at 3,462.08 (close)
Euro/dollar: DOWN at $1.2438 from $1.2507 at 2200 GMT
Pound/dollar: DOWN at $1.4118 from $1.4263
Dollar/yen: UP at 110.36 yen from 109.39 yen
Oil – Brent North Sea: DOWN $1.59 at $68.06 per barrel
Oil – West Texas Intermediate: DOWN $1.08 at $64.72
BSS/AFP/HR/1000