LONDON, April 6 — European shares fell yesterday to post their biggest daily fall of 2013 after US jobs figures came in much lower than expected.
Rumours of a weak US non-farm payroll figure had hit stocks in morning trade, triggering breaks below several technical support levels on the German DAX.
The FTSEurofirst extended falls in the afternoon when the figure came in below even the rumoured numbers, fuelling demand for safe-haven assets such as Bunds.
US employers hired 88,00 workers in March, less than half the consensus figure from a Reuters poll of 200,000 and the slowest pace in nine months.
“It’s a bad number, much worse than consensus or the whisper numbers that were being circulated,” Joshua Raymond, strategist at City Index, said.
“The reaction in the markets has been quick and aggressive but if anything, it keeps the Fed’s fingers firmly pressing QE.”
Easy monetary policy from central banks across the globe have helped European stocks up towards 5-year highs, and shortly before the jobs data, a top Federal Reserve official said that a “scarring” of the US labour market may justify continued bond buying by the US central bank.
“There is more room to the downside given the fact that nearly all the major global stock indices have recently either reached, neared or broken record highs, so we could see the return of the bears en masse,” Fawad Razaqzada, analyst at GFT Markets, said.
“But with major central banks still printing money like there is no tomorrow, I don’t think the losses will be huge. A lot of people who missed the rally wanted to get in on some sort of a pullback and they have a chance to do that now,” he added, saying he saw support at around 7,560 on the DAX.
The German blue-chip index breached its 50-day moving average at 7,797 in morning trade before extending losses sharply by 1.1 per cent in just four minutes.
Razaqzada said stop-losses which had been set up ahead of the U.S. data release may have been triggered, helping to accelerate losses, and meaning that much of the non-farm payroll miss was already priced in.
The FTSEurofirst closed down 1.6 per cent at 1,162.21, its biggest daily fall so far this year, and was down 2.2 per cent on the week — its worst weekly showing for nearly five months.
The Euro STOXX 50 fell 1.4 per cent, falling below the 50 per cent retracement of the rally from mid November to January peaks.
All sectors contributed to falls, with the STOXX Europe 600 Travel and Leisure index dropping 3.4 per cent — the worst-performing European sector, led by airline stocks on concerns that the spread of bird flu in Asia could deter air passengers.
Air France-KLM, Lufthansa, IAG and Ryanair all fell between 3.2 per cent and 7.7 per cent. British budget carrier easyJet fell 6.4 per cent despite saying that it would nearly halve its first-half loss.
“If the bird flu situation escalates, it could cause a further pullback in some of the travel-orientated names,” James Butterfill, global equity strategist at Coutts, said. — Reuters