Markets lick wounds after tumbling on US jobs data
TOKYO, June 4 — Global investor sentiment remained brittle today, with risky currencies and some US stock futures staging only a meek rebound from last week’s heavy sell-off sparked by weak US jobs data.
The euro was off its lows hit on Friday and the yen retreated from its highs against the dollar, while the Australian dollar, which is closely linked to investor risk appetite, crawled back from eight-month lows hit on Friday.
But, overall, investors were still hedging against global financial and economic crisis, heading for safe havens and sending US and German government bond yields to record lows.
US stock index futures were mixed yesterday in electronic trading after posting the biggest per centage drop for the year for stocks on Friday. S&P 500 futures was down 0.4 point, signalling a slight dip at the open this morning, but Nasdaq 100 futures were up 0.2 per cent.
Japan’s Nikkei was expected to open sharply lower, after marking its ninth straight week of losses, the longest such run in 20 years, last week.
US job growth braked sharply for a third straight month in May and the jobless rate rose for the first time in nearly a year, with 69,000 jobs added to payrolls last month, the least since May last year. As well, 49,000 fewer jobs were created in the previous two months than had been thought.
“We may even see more talk of the need for additional quantitative easing,” Standard Chartered Bank said in a research note, adding that the data had given ammunition to doves ahead of the US Federal Reserve’s policy meeting on June 19-20.
The weak US data followed poor Chinese manufacturing data and dismal European reports on factory activity reports. Markets had already been on edge over the deepening crisis in the euro zone’s debt problems, with worries about the Spanish banking sector and Greece’s fate with the euro bloc.
European shares hit new 2012 lows on Friday and commodity prices also slid. The benchmark Thomson Reuters-Jefferies CRB index, a global commodities benchmark, fell 1.7 per cent, after plunging nearly 11 per cent in May for its second-largest monthly decline since 2008.
Safe-haven assets such as gold rose, posting its biggest one-day rally in more than three years on Friday.
The yen, perceived as a safer currency in times of crisis, hit a 3-1/2 month high against the dollar of 77.65 yen, and stood at 78.15 yen early today.
The yen was at 97.08 against the euro, after climbing to its highest since December 2000 of around 95.59 yen against the euro on Friday.
The euro was at US$1.2420 early today, recovering from Friday’s low of US$1.2288.
“The evolving global slowdown amidst global sovereign financing dilemmas has pushed the yen back into super yen territory, signalling extreme pressures,” said Richard Hastings, macro and consumer strategist at Global Hunter Securities, adding that he saw little relief in the euro/yen pair.
“If the European situation worsens, then the global interest rate and policy solutions would require coordinated actions by the Bank of Japan and the Federal Reserve to assure access to US dollar money markets, otherwise risk a contraction in global trade,” he said.
Analysts are closely watching several central bank policy meetings due this week, including the Reserve Bank of Australia tomorrow and the European Central Bank on Wednesday.
They expect the safe-haven flight to bonds to continue until clarity emerges on key issues such as the Greek elections due on June 17 and European bank recapitalisation. — Reuters