A surprisingly strong US jobs report yesterday sent bond and gold prices sharply lower and initially lifted equity markets, but mounting tensions over Ukraine led stocks in Europe and elsewhere to retreat, while US shares traded near flat.
Diplomatic efforts to cool the crisis in Ukraine calmed markets earlier in the week, but as tensions rose over Russia’s intervention in Crimea, investors tried to shield themselves before the weekend from any potential confrontation.
European blue chips exposed to Russia and Ukraine came under renewed pressure as Germany’s DAX index, considered the most vulnerable to any fallout, fell two per cent, the biggest drop among major regional indices.
The Euro STOXX Volatility Index, a sign of investor apprehension, jumped 14.9 per cent. But its US counterpart, the CBOE Volatility Index, rose less than one per cent.
The FTSEurofirst 300 index of top European shares extended losses into the close, finishing down 1.3 per cent at 1,326.70.
MSCI’s all-country world equity index retreated to trade 0.35 per cent lower after trading just off peaks last seen at the end of 2007.
Wall Street was mostly flat, with the better-than-expected US nonfarm payrolls report pushing the benchmark S&P 500 index to a fresh intra-day record high before it retreated.
The Dow Jones industrial average rose 15.45 points, or 0.09 per cent, to 16,437.34.
The S&P 500 lost 1.27 points, or 0.07 per cent, to 1,875.76 and the Nasdaq Composite dropped 23.913 points, or 0.55 per cent, to 4,328.212.
US Treasuries yields rose to their highest in six weeks after the February jobs report eased fears of an abrupt slowdown in economic growth and kept the Federal Reserve on track in reducing its monetary stimulus.
US employers added 175,000 jobs to payrolls after creating 129,000 positions in January, the US Labour Department said. However, even as job growth accelerated sharply, the unemployment rate rose to 6.7 per cent from a five-year low of 6.6 per cent.
Benchmark 10-year Treasury notes dropped 18/32 in price, the yield rising to 2.81 per cent, the highest since January 23. It was last down almost 15/32 in price to yield 2.7897 per cent.
German Bund futures rose 6 ticks to settle at 142.24, clawing back some ground after suffering their biggest one-day fall since late December on Thursday after the European Central Bank refrained from new stimulus measures.
The dollar rose from a four-month low. The dollar index , a composite of six currency pairs, traded 0.06 per cent higher at 79.710. It earlier hit a bottom of 79.433 last seen on October 29.
The dollar was up 0.22 per cent against the yen at 103.29 yen, while the euro rose 0.13 per cent to $1.3876.
US COMEX gold futures for April delivery fell $13.60 to settle at $1,338.20 an ounce. Gold futures for April delivery fell 1.03 per cent to $1,337.9 an ounce.