World stock markets tanked yesterday as disappointing US job figures and the European Central Bank’s decision to slash its growth and inflation forecasts fuelled pessimism over the global outlook.
The US government reported that job creation ground to a virtual halt last month, the latest warning of a lean road ahead after the ECB’s announcement and China unveiling a target for growth that would be its slowest in three decades.
Wall Street opened solidly down after the jobs announcement, which also follows the US Federal Reserve indicating it will hold off any fresh rate hikes this year.
US employers added just 20,000 net new positions in February, down from 311,000 in January ‒ and far below the 173,000 economists had projected ‒ according to a US Labor Department report.
James Knightley, chief international economist at Dutch bank ING, said the jobs report “clearly disappointed”, adding that “it offers support to the dovish shift in the Federal Reserve's policy stance”.
But he said the unemployment number “contradicts virtually all other evidence on the jobs market”.
“Falling unemployment and rising wages should be the focus,” he said, after the jobless rate fell two tenths to 3.8 per cent.
Asia had joined the selloff yesterday after data showed China’s trade fell off a cliff last month.
Exports plunged more than 20 per cent in February, while imports were also sharply down.
In midday deals, London’s FTSE 100 index dived 1.0 per cent in value, with miners hit hard by worries over demand from key commodity consumer China.
In the eurozone, Frankfurt fell 0.7 per cent and Paris shed 0.7 per cent, extending Thursday’s ECB-fuelled losses.
The European single currency meanwhile struggled to rebound from a near two-year low of $1.1177 that was struck the previous day.
The ECB said Thursday that eurozone interest rates would be stuck around historic lows until the year’s end at best, with bank boss Mario Draghi warning the eurozone was “coming out of, and maybe we still are in a period of continued weakness and pervasive uncertainty”.
The economic outlook has remained shrouded in gloom this year over Brexit, China's slowdown, and the ongoing global trade war.
“Rather than ‘Brexit uncertainty’ we should be talking about ‘Eurozone uncertainty’, given that Germany is flirting with recession and Italy is in recession,” VTB Capital analyst Neil MacKinnon told AFP.
“The ECB has already sounded the alarm bells for the eurozone.”
Oil prices were down more than one per cent after the Norwegian government said its sovereign wealth fund would divest its stakes in oil and gas.
However, as the decision does not affect downstream operations, oil giants such as ExxonMobil, Shell, BP and Total will not be affected.