NEW YORK, April 6 — Major stock markets tumbled and the dollar fell yesterday, after a weaker-than-expected jobs report added to fears the US economic recovery may be losing steam, driving a bid for safety that boosted prices of US Treasury securities and gold.
Brent crude oil fell to an eight-month low as the bleak US jobs data dimmed the outlook for fuel demand in the world’s largest oil consumer.
US employers hired at the slowest pace in nine months in March, adding just 88,000 nonfarm jobs, the Labour Department said, below an expected 200,000. The jobless rate ticked a tenth of a point lower to 7.6 per cent, but the drop was largely due to people dropping out of the work force.
“The report will fuel concerns about another spring swoon for the economy, the adverse impact of Congressional dysfunction, and more generally, the weak underlying dynamism of the economy,” said Mohamed El-Erian, co-chief investment officer at Pacific Investment Management Company.
The report followed a string of disappointing data this week on activity in the US manufacturing and services sectors and on private-sector hiring, raising concern the recent rally in equities has outrun economic fundamentals.
Japanese shares climbed to near a five-year high overnight, with the market in Tokyo closing before the US jobs data was announced, a day after the Bank of Japan took bold monetary easing measures to fight deflation. Tokyo’s Nikkei stock average jumped 4.7 per cent, topping 13,000 points for the first time since August 2008.
The yen sank to its weakest level in more than 3-1/2 years against the dollar, and benchmark 10-year Japanese government bond yields fell to a record low of 0.315 per cent. The yen, down 3.5 per cent this week against the dollar, posted its worst week since December 2009. Against the euro, the yen saw its largest weekly loss since November 2008, down about 5 per cent.
The MSCI world stocks index slipped 0.3 per cent on the day to 355.36 points.
US stocks ended their worst week this year with losses yesterday after the jobs data undermined confidence in the economy and first-quarter earnings. The US quarterly, corporate earnings season will start up next week.
The Dow Jones industrial average dropped 40.86 points, or 0.28 per cent, to close at 14,565.25. The Standard & Poor’s 500 Index dropped 6.70 points, or 0.43 per cent, to end at 1,553.28. The Nasdaq Composite Index dropped 21.12 points, or 0.66 per cent, to 3,203.86.
For the week, the Dow fell 0.1 per cent, the S&P lost 1 per cent and, the Nasdaq dropped 1.9 per cent.
European shares tumbled 1.5 per cent, the biggest daily fall of the year, to close at 1,162.21 points. — Reuters