Yahoo Finance European stocks close cautiously higher on the back of US payroll numbers
European stock markets edged higher on Friday as US jobs grew less than expected in March but the unemployment rate fell to a new two-year low.
The FTSE 100 (^FTSE) climbed a modest 0.3% to 7,536 as trade closed, while the French CAC (^FCHI) inched 0.4% higher. The DAX (^GDAXI) was up 0.3% in Germany.
Across the pond, the S&P 500 (^GSPC) was flat at 4,531 while the tech-heavy Nasdaq (^IXIC) climbed 0.1% to 14,236. The Dow Jones (^DJI) was muted at 34,681 as trading continued on Wall Street.
In London, oil major BP (BP.L) was up 0.6% after losing more than 1% in early trading, while Shell (SHEL.L) was down 0.3% as oil prices fell further ahead of a meeting of consumer nations to discuss a new release of emergency oil reserves.
Housebuilders were among the biggest gainers on the London benchmark, with Taylor Wimpey (TW.L), Persimmon (PSN.L) and Barratt Developments (BDEV.L) all pushing higher. They advanced 1.6%, 1.1% and 0.4%, respectively.
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Toby Sturgeon, global head of fiduciary investment services at ZEDRA, said: “Non-farm payrolls rose by 431,000 in March disappointingly lower than consensus predicting 490,000 however, last month’s surprise numbers were upwardly revised from 678,000 to 750,000, essentially offsetting the lower than expected figure.
"Whilst the median number disappointed it was notable that the range of estimates went from zero to 700,000 indicating just how uncertain the market was. Unemployment fell by 0.2 percentage points to 3.6% in March, which also came in lower than expected (3.7%).
"This brings the total number of unemployed in the US to 6 million which is similar to pre-pandemic levels. February 2020 saw unemployment at 3.5% with 5.7 million unemployed.
"Average hourly earnings increased by 5.6% year on year sparking concerns that the economy may be overheating. Today’s unemployment numbers coupled with the inflation data on the 12 April will be crucial to the Federal Reserves rate decision in May. Bond yields in the US rose marginally as news broke but equity markets remained stable.”
Russ Mould, investment director at AJ Bell, noted: “The Federal Reserve says inflation rather than jobs is now its primary source of concern. Therefore, it is likely to be more interested in wage growth than the headline jobs data, particularly with a view to forming a decision on whether interest rates should go up at its next policy committee meeting on 4 May, and by how much.”
“Bond markets have recently been flashing the type of warning signs that have historically come before a recession and so investors will be watching today’s jobs figures like a hawk. Wage growth exceeding forecasts could cause markets to wobble but equally, that might encourage the Fed not to be overly aggressive at its next policy meeting,” he added.
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Craig Erlam, senior market analyst at OANDA, commented: "The US jobs report was once again quite strong, even if the headline NFP fell a little short of expectations. The creation of 431,000 jobs is still extremely good at a time when unemployment is falling to 3.6%, which surpassed expectations.
"Throw into the mix higher participation which the Fed will no doubt be pleased to see as this is one thing that can alleviate some of those wage pressures and it's hard to find fault with the report. As it is, wages are still rising strongly at 5.6%, somewhat offsetting the inflation drag. Ultimately, this means plenty of rate hikes this year and probably more chance of one or two super-sized, the first of which is now heavily priced in for May."
Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 (^N225) lost 0.5% in Tokyo, and the Hang Seng (^HSI) fell 0.2% in Hong Kong. The Shanghai Composite (000001.SS) advanced 0.9%.
Meanwhile, crude oil prices inched lower but remain well above the $100 a barrel mark. Brent crude (BZ=F) was trading at $107 a barrel this Friday as investors remain on edge about energy supply shortages despite Joe Biden’s vow to release one million barrels a day.
The International Energy Agency will hold an emergency meeting this Friday to discuss a potential release of oil reserves in an effort to tame soaring prices.
