Stock markets sagged around the world yesterday after the release of US jobs numbers signalled a tightening of the labour market and increased inflation pressures, while longer-dated Treasury yields rose.

The increase in non-farm payrolls slowed in September, likely from Hurricane Florence's impact on restaurant and retail payrolls, but the US Labour Department report also showed a rise in wages that could keep the Federal Reserve on track for more interest rate hikes.

The Dow Jones Industrial Average fell 131.7 points, or 0.49 per cent, to 26,495.78, the S&P 500  lost 5.49 points, or 0.19 per cent, to 2,896.12 and the Nasdaq Composite  dropped 43.12 points, or 0.55 per cent, to 7,836.40.

The pan-European FTSEurofirst 300 index lost 0.73 per cent and MSCI’s gauge of stocks across the globe shed 1.00 per cent.

A steep sell-off in Treasury bonds that started midweek and pushed 10-year yields to seven-year highs has weighed on stocks and rippled through bond markets globally.

“This week has been a bit of a bloodbath on the fixed income side of things,” said Dean Popplewell, chief currency strategist at Oanda.

“I think the market moves in the bonds this week sideswiped a lot of individuals.”

The yield on the 30-year Treasury bond reached a four-year high of 3.396 per cent, up 4.5 basis points from late Thursday.

The benchmark 10-year yield rose to 3.233 per cent, up 3.8 basis points from late Thursday, but it had retraced some of those gains by mid-session dealings.

The US bond market will be closed on Monday for the Columbus Day holiday, though stock markets will open.

In the currency market, the US dollar weakened in choppy trading. The dollar index fell 0.04 per cent The euro was down 0.03 per cent to $1.151.

The Japanese yen strengthened 0.16 per cent versus the greenback at 113.73 per dollar, while Sterling  was last trading at $1.3087, up 0.53 per cent on the day.

Fears about Italy’s finances pushed Milan stocks down more than one per cent, while London’s FTSE, Frankfurt’s DAX and the CAC in Paris were off 1.1 to 0.95 per cent.

West Texas Intermediate (WTI) crude futures rose 44 cents to $74.77 a barrel. It was on track for a weekly gain of about two per cent.

Brent crude futures lost nine cents to $84.49 a barrel. The contract was on course for a rise of around two per cent for the week.

“Iranian exports could fall below one million barrels per day in November,” US bank Jefferies said.

The bank said there was enough oil to meet demand, but “global spare capacity is dwindling to the lowest level that we can document... meaning any further supply disruptions would be difficult for the market to manage – and could lead to spiking crude oil prices.”

The combination of rising oil prices, borrowing costs and a climbing dollar have also been rocking emerging markets, which tend to be vulnerable to all three.

Emerging market stocks lost 2.38 per cent.

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