Image: Reuters Berita 24 English - Global share markets slumped on Friday as U.S. Treasury yields rose to two-week highs after data showed t...
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| Image: Reuters |
Berita 24 English - Global share markets slumped on Friday as U.S. Treasury yields rose to two-week highs after data showed the American economy added more jobs than predicted in May, indicating the Federal Reserve will likely keep hiking interest rates to keep inflation under control.
The Labor Department's carefully watched employment report revealed that the US economy added 390,000 jobs in May, with the unemployment rate remaining at 3.6 percent for the third month in a row, exceeding most analyst expectations.
Traders were hopeful that the jobs data would disclose more evidence of economic weakness in the United States, which would urge the Federal Reserve to ease its position on inflation and interest rates in order to avert a recession.
"With the exception of retail trade, it was growth across the board, and the economy on the jobs front continues to power ahead," said Josh Wein, portfolio manager at Hennessy Funds in Chapel Hill, North Carolina. "The Fed still needs to kill a little bit of demand, and they're going to keep doing that with 50-point rate hikes for at least the next several meetings."
The MSCI world equity index, which includes stocks from 50 nations, fell 1.14 percent. The STOXX 600 index was down 0.26 percent across Europe.
Following the positive jobs news, US Treasury rates rose to two-week highs. The rate-sensitive two-year note was up at 2.6606 percent, while the benchmark 10-year note was up at 2.946 percent.
On Wall Street, sell-offs in the technology, consumer discretionary, communication services, financials, and industrials sectors pushed all three major indexes lower.
The Dow Jones Industrial Average sank 1.05 percent to 32,899.7, the S&P 500 was down 1.63 percent to 4,108.54, and the Nasdaq Composite was down 2.47 percent to 12,012.73.
"Some of the recent surge (in equities) was due to the Fed conceding that they could evaluate and possibly take a pause in the fall. However, the market is retracing some of its earlier losses and declaring that everything is off the table "Wein remarked.
Following the employment report, the US dollar gained ground versus a basket of currencies. The dollar index increased by 0.393 percent, while the euro declined by 0.25 percent to $1.0718.
Oil prices rose, boosted by anticipation that OPEC's decision to raise output objectives by a small amount more than expected will have little impact on tight global supplies, as well as rising demand as China eases COVID-19 pandemic-related restrictions.
Brent crude gained 1.8 percent to $119.72 a barrel, while US West Texas Intermediate crude gained 1.7 percent to $118.87 a barrel. In after-hours trade, both benchmarks were up more than $3.
The attraction of gold was diminished by the surge in the US currency and Treasury yields following the good jobs news, and gold prices fell nearly 1%.
Spot gold declined 0.9 percent to $1,850.57 per ounce, while gold futures in the United States fell 0.99 percent to $1,848.10 per ounce.
