US Stocks Slide, Global Markets Weaken, After 'Noisy' September Jobs Report

U.S. equity futures slipped Friday, while bond yields edged higher and the dollar held earlier advances, as data from the Bureau for Labor Statistics showed a smaller-than-expected increase in job creation last month but solid gains in wages.
By Martin Baccardax ,

The Friday Market Minute

  • Global stocks retreated again Friday, as government bond yields continue to rise, following a weaker-than-expected reading of September jobs report.
  • Non-farm payroll increased by 134,000 last month, but investors focused on the 0.3% gain in hourly wages over the headline unemployment rate falling to a 1969 low of 3.9%.
  • The U.S. dollar index remains elevated in foreign exchange markets, keeping emerging market and Asia stocks on the back foot as risky asset re-pricing.
  • Global oil prices resume their climb after yesterday's sell-off, with crude booking solid gains following comments from White House security adviser John Bolton on Iranian sanctions.

Market Snapshot

U.S. equity futures slipped Friday, while bond yields edged higher and the dollar held earlier advances, as data from the Bureau for Labor Statistics showed a smaller-than-expected increase in job creation last month but solid gains in wages.

The BLS said a net 134,000 jobs were added last month, while wages advanced at a 0.3% clip, both figures falling shy of the consensus forecast but were likely impacted by Hurricane Florence, which hammered the Carolina Coast earlier in the month. The headline unemployment rate, however, slipped to 3.7%, the lowest since 1969. Last month's jobs number was also revised higher, to 270,000, but the wage gains, first estimated at 0.4%, were revised down to 0.3%.

Futures contracts tied to the Dow Jones Industrial Average I:DJI suggested a 35 point opening bell decline while those tied to the S&P 500 I:GSPC suggested a 5.5 point fall for the broader benchmark. Nasdaq Composite I:IXIC futures were marked 43 points lower from last night's close.

Benchmark 10-year government bond yields rose 3 basis point to 3.231%, close to the 2011 high it hit earlier this week, while the U.S. dollar index climbed back to 95.87 following the BLS release.

A series of comments from Fed officials this week, including Chairman Jerome Powell, as well as a host of U.S. economic data confirming both robust economic growth and a tight labor market, have forced investor to re-price both the "risk free" rate of U.S. Treasury bonds and the trillions in assets that are linked to them in markets all over the world.

The moves have taken benchmark 10-year U.S. Treasury bond yields to 3.23% -- the highest in seven years -- and boosted the value of the dollar on global foreign exchange markets while trimming more than 200 points from the Dow Jones Industrial Average I:DJI and pushing broader U.S. stocks into their worst session since June 25. 

With markets in China closed for the final day of the Golden Week holiday celebrations, markets in Asia were weaker across the board, with the MSCI Asia ex-Japan index falling 0.7% and the Nikkei 225 notching its second consecutive decline to close 0.8% lower at 23,783.72 points.

European stocks were weaker, as well, with the Stoxx 600 down 0.6% by mid-day in Frankfurt and Italy's FTSE MIB index falling 1.1% in Milan amid ongoing concern over the spending plans of the anti-European government at the helm of the region's third-largest economy.

Britain's FTSE 100 drifted 0.66% in London, as the pound crept past 1.3030 against the dollar and benchmark 10-year government bonds, known as gilts, traded at 1.69%, the highest since January 2016. In Germany, benchmark 10-year bund yields jumped to a four-and-a-half month high of 0.553%. 

Global oil prices were back on the march Friday, as well, following yesterday's sharp "risk-off" related pullback sparked by the surge in Treasury yields, which sent Brent crude nearly 2% lower by the close of trading.

The upward pressure on prices was linked, in part, to comments from White House security adviser John Bolton, who told reporters in Washington yesterday that Iran has been "the world's central banker of international terrorism since 1979" and that looming U.S. sanctions on the sale of Iranian crude, which kick in next month, would seek to reduce Tehran's sales to zero.

Brent crude prices for December delivery, the global benchmark, were seen 11 cents lower from their Thursday close in New York and trading at $84.47 per barrel. WTI contracts for November delivery, which are more tightly linked to U.S. gasoline prices, were marked 20 cents higher at $74.52 per barrel.

Loading ...