US equities slip despite strong jobs data

Friday 21.05 GMT. Stocks are lower after surging oil prices return to haunt a market that has taken slightly better-than-expected US jobs data in its stride.The FTSE All-World index is down 0.4 per cent, dragged lower by a 0.7 per cent slide for the S&P 500 in New York. Anxiety sees gold recovering a big chunk of Thursday’s fall.
Wall Street had briefly opened marginally higher after the US economy was shown to have generated 192,000 jobs in February against forecasts for a 185,000 gain. The unemployment rate fell from 9 per cent to 8.9 per cent.The jobs report is the latest in a slew of upbeat data that over the past couple of sessions had helped investors all but shrug off geopolitical concerns emanating from the Middle East and North Africa.Bulls were quick to portray Friday’s labour survey as a data sweet spot: robust enough to suggest the economic recovery is strengthening but, naturally for their purposes, not so robust that the Federal Reserve should consider tightening interest rates. A fall in Treasury yields supports this reasoning.But equity gains were fleeting with some traders disappointed that ebullient job “whisper” numbers – which may have been behind Thursday’s 1.7 per cent Wall Street bounce – had not been met, and as attention again turned to the rising oil price.“We so held hostage to Libya and oil right now, it’s hard to draw too many conclusions from trading,” said John Schlitz, chief US market technician at Instinet, an agency brokerage.
Nymex-traded crude breached $104 a barrel for the first time since September 2008 as dealers were spooked by reports of more fighting in Libya and civil unrest elsewhere in the region, with Friday usually the day when tensions are at their height.
Chatter in the market over recent days was that oil had lost some of its sentiment-determining heft. But that was easy to say when the price was pausing for breath. The action on Friday suggests that now investors have got the non-farm payrolls data out of their system, crude supply worries have moved back into focus.

Europe
Europe – Bourses opened with gains, as dealers discounted Wall Street’s drive higher into its close overnight. But these were lost as the US turned tail in its new session. The FTSE Eurofirst 300 fell 0.7 per cent and London’s FTSE 100 lost 0.2 per cent, as energy groups continued to reap the reward of the higher oil price, while banks struggled.

Commodities – Oil is showing signs that the bulls are still in command, as Mideast supply worries fester. Brent crude is up 1 per cent to $115.98 a barrel, while the US-based Nymex product is up 2.9 per cent to $104.81, having at one point touched $104.32.

Gold is rebounding after suffering a battering on Thursday, when it dropped nearly $25 from its peak, when broader market optimism encouraged the rejection of perceived haven bets. But risk aversion is back on Friday, again powering the precious metal, up 0.8 per cent to $1,427 an ounce. The industrial metal complex is slightly lower, following the drop in risk appetite, with copper down 0.3 per cent at $4.47 a pound.

Forex

Forex – It was initially deathly dull in the currency markets with traders unwilling to enter new positions ahead of the US jobs data. And there was surprisingly little movement in most major crosses once the news broke. The dollar index is down 0.1 per cent and near a four-month low at 76.37 and the euro is holding near its best levels since November on ECB rate hike expectations, currently $1.3958, up 0.1 per cent.

Rates

Rates – Core bond yields are moving lower as haven flows overpower any economic recovery-related selling. The benchmark 10-year US Treasury is down 7 basis points at 3.48 per cent.

The five-year “breakeven” spread, which measures the premium to own inflation-protected notes, is down 3 basis points to 2.21 per cent, suggesting a pull-back in growth hopes.

Asia Pacific

Asia-Pacific – Shares rose, paced by airlines and shipping groups, as more stable oil prices during the Asian session and positive US economic data overnight raised investors’ spirits.

The FTSE Asia Pacific index is up 1.1 per cent, with Tokyo’s Nikkei 225 up 1 per cent on renewed optimism about the global economic recovery and as the yen’s fall on Thursday encouraged buying of exporters.

Firmer resources stocks boosted Sydney by 1.2 per cent, while another day of net foreign fund buying pushed Korea’s Kospi index up 1.7 per cent. Korean builders rebounded on easing concerns over losses due to halted construction work in Libya.

Cathay Pacific Airways and China Southern Airlines rose strongly in Hong Kong, rebounding from the recent sell-off on fears of surging fuel prices. The Hang Seng index added 1.4 per cent, while the mainland’s Shanghai Composite closed near a four-month high, up 1.4 per cent, as banks were in demand.