Global equity markets tumbled and the dollar was mixed on Friday after a US jobs report for August kindled uncertainty over whether the Federal Reserve will raise interest rates in two weeks.seven-and-a-half-year low and wages accelerated, data that favours a rate hike when policy-makers meet September 16-17. But the Labour Department report showed job growth was a less-than-expected 173,000.
Adding to the uncertainty, the report may be flawed due to a statistical fluke that has led to sharp upward revisions in the past to payroll figures for August after initial weak readings.
The CBOE Volatility Index, Wall Street’s so-called fear gauge, closed up 7.89 per cent at 27.63, or about double this year’s mostly calm level until it erupted in mid-August.
US and European stocks ended the week lower. The pan-European FTSEurofirst 300 index closed down 2.5 per cent to 1,392.63 points, and was off 3.0 per cent for the week. MSCI’s all-country world stock index slid 1.65 per cent, and its emerging markets index fell 1.96 per cent.
On Wall Street, the Dow Jones industrial average fell 272.38 points, or 1.66 per cent, to 16,102.38. The S&P 500 slid 29.91 points, or 1.53 per cent, to 1,921.22 and the Nasdaq Composite lost 49.58 points, or 1.05 per cent, to 4,683.92.
US medium- and long-dated Treasuries prices rose, while short-dated prices were slightly lower.
The benchmark 10-year Treasury rose 11/32 in price to yield 2.1297 per cent, while the US two-year note fell slightly to yield 0.7046 per cent.
Eurozone bond yields fell further following a strong signal from the European Central Bank on Thursday that it is willing to take further steps to shore up the currency bloc’s economy.
German 10-year yields, the eurozone benchmark, fell 7 basis points to 0.67 per cent, their lowest level in more than a week.
For some, strong US average hourly earnings and a drop in the unemployment rate to 5.1 per cent support the view that the Fed will hike rates when policy-makers meet Sept. 16-17.
But with US investors heading into a long US Labour Day weekend, lingering worries about China add to their unease.
The dollar index of major currencies fell 0.20 per cent, while the dollar last traded at 118.99 yen, or a loss of 0.89 per cent.
The euro rebounded, up 0.26 per cent at $1.1150.
Crude futures fell as traders paid little heed to a drop in the number of US rigs drilling for oil, focusing instead on a supply glut and declining stock prices on Wall Street.
Brent crude, the global benchmark for oil, fell $1.07 to settle at $49.61 a barrel. US crude’s front-month settled down 70 cents to $46.05.