NEW YORK/LONDON (Reuters) – Global equity markets wavered on Friday on a weak U.S. labor market report, and Treasury yields rose as investors still expect the Federal Reserve to begin tapering its massive bond purchases as early as next month.
Yields on the benchmark 10-year U.S. Treasury note climbed above 1.6% for the first time since June, the dollar eased and stocks on Wall Street slid as technology and other high-growth shares sold off while energy and financials gained.
The U.S. economy created the fewest jobs in nine months in September amid a drop in hiring at schools and worker shortages. Some attributed that at least partly to jobs lost after vaccine requirements were imposed to combat the surge of the Delta variant.
The unemployment rate dropped to an 18-month low of 4.8%.
“The headline weakness hides an otherwise much stronger job market than we’re currently seeing,” said Russell Price, chief economist at Ameriprise Financial Services Inc in Troy, Michigan. “It’s related to mandates for vaccinations for the people who may have lost their jobs because of that.”
MSCI’s all-country world index slid 0.05%, but rose 0.7% for the week.
In Europe the broad STOXX Europe 600 index closed down 0.28% stocks yet marked its best week in two months as fears of soaring inflation were tempered.
Gains in oil and bank stocks in Europe were outweighed by a 1.4% decline in tech stocks as rising bond yields dimmed the high-growth sector’s appeal, a story seen on Wall Street too.
The Dow Jones Industrial Average slipped 0.03%, the S&P 500 slid 0.19% and the Nasdaq Composite fell 0.51%, pulled lower after Wells Fargo cut its price target on Comcast Corp, which tumbled 4.7%.
All three indexes gained for the week.
The September jobs report was the last one before Fed policymakers meet Nov. 2-3, when the market expects tapering to begin or a timeline to be announced.
The Fed has made it clear that it does not need a blockbuster jobs report to taper in November, said Kathy Lien, a managing director at BK Asset Management in New York.
“While you’re seeing a little bit of a pullback in the dollar, I think the Fed remains on track,” she said.
The dollar index, which tracks the greenback versus a basket of six currencies, fell 0.076% to 94.105.
The euro was up 0.19% at $1.1572, while the Japanese yen traded up 0.56% at $112.2200.
The sideways market is due to an information vacuum before the third-quarter earnings season starts next week, said Thomas Hayes, chairman and managing member of Great Hill Capital LLC.
“The last few weeks there’s some uncertainty with Delta, so the market is really looking forward to estimates,” Hayes said.
Global stock indexes turned positive for the week after Thursday’s rally despite widespread selling initially as soaring energy prices and the prospect of sooner-than-expected interest rate hikes to combat inflation rattled investors.
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The U.S. Senate’s approval of legislation to raise the federal government’s debt limit and avoid a historic default buoyed risk sentiment, though it only put off a decision on a longer-term remedy until early December.
In Asia, the main share benchmark was supported by advances in Chinese blue chips, which rose 1.31% as trading resumed after the week-long National Day holiday. Sentiment improved from a private-sector survey that showed China’s services sector returned to growth in September.
Chinese shares have been battered the past three months by regulatory clamp-downs, turmoil in the property sector related to China Evergrande’s vast debt, and recent power shortages. But some investors are starting to see a buying opportunity.
Oil prices rose, gaining more than 4% on the week, as a global energy crunch lifted prices to their highest since 2014 as big global power users struggle to meet demand.
Brent crude rose 0.54% to settle at $82.39 a barrel. U.S. crude settled up 1.34% at $79.35 a barrel.
U.S. gold futures settled down 0.1% at $1,757.40 an ounce.
(Reporting by Herbert Lash; additional reporting by Sujata Rao and John McCrank; Editing by Chizu Nomiyama, Kevin Liffey, Dan Grebler, Cynthia Osterman and Sonya Hepinstall)
