Stellar US jobs report fails to light up markets

A monitor displays numbers ahead of the closing bell on the floor of the New York Stock Exchange (NYSE) on January 29, 2019 in New York City. — AFP pic
A monitor displays numbers ahead of the closing bell on the floor of the New York Stock Exchange (NYSE) on January 29, 2019 in New York City. — AFP pic

LONDON, Feb 1 — Data released today showed the US economy added a staggering 300,000 jobs last month, providing some reassurance that the government shutdown did little damage to the wider economy, but the news failed to move investors.

But the first trading day in February came after a blockbuster month of January in which Wall Street saw its best start to the year in 30 years.

“That’s a tough act to follow, which helps explain a little bit of the sluggishness in the futures market this morning, as market participants question just how much longer this hot run ... can last,” said analyst Patrick O’Hare, noting the S&P 500 was up 15 per cent from its December 24 low.

Wall Street opened mixed, with the Dow adding 0.3 per cent in the first minute of trading, while both the broader S&P 500 and tech-heavy Nasdaq Composite both moving lower.

European markets were also lacking strong trends in afternoon trading, with both London and Paris showing modest gains, while Frankfurt dipped.

“Yesterday, the market had a somewhat unstoppable feeling to it, which is perhaps an early indication (based on a contrarian viewpoint) that the rally is about to stop,” added O’Hare.

Earlier this week the Federal Reserve fuelled a rally on Wall Street by signalling a slowdown in its pace of American interest rate hikes this year.

China-US trade talks this week ended with no deal but with both sides sounding notes of optimism and setting up more high-level meetings later this month, temporarily soothing concerns of an all-out trade war.

Today’s non-farm payrolls figures were being watched for signals about the state of the world’s number-one economy, with the Fed having already warned of a global slowdown.

“This is another really strong jobs report with non-farm payrolls rising 304,000 in January ... and suggests that the US economy is in great shape with businesses desperate for workers,” said James Knightley, chief international economist at Dutch bank ING.

He added it “suggests that the US economy hasn’t been adversely impacted by the government shutdown in any meaningful way.”

However growth in pay held steady just above inflation, and the jobless rate ticked up to 4.0 per cent as the government was hit by a five-week shutdown.

“More people are being tempted back into the labour force –- the rise in the participation rate proves that –- but employers aren’t paying over the odds to get them,” said David Lamb, head of dealing at Fexco Corporate Payments.

“All this means inflationary pressure is modest, and the Federal Reserve will feel no hurry to push through its next interest rate hikes,” he added.

Separately, official data showed today that eurozone inflation is moving further away from the European Central Bank’s target of 2.0 per cent — indicating that the ECB would be less likely to raise interest rates this year.

In foreign exchange activity, the European single currency rose against the dollar.

The Shanghai stock market jumped today to close up 1.3 per cent, as traders welcomed news that authorities had relaxed certain rules to make investing easier.

Key figures around 1430 GMT

London – FTSE 100: UP 0.6 per cent at 7,007.75 points

Frankfurt – DAX 30: DOWN 0.1 per cent at 11,160.90

Paris – CAC 40: UP 0.3 per cent at 5,005.46

EURO STOXX 50: FLAT at 3,158.77

New York – Dow: UP 0.3 per cent at 25,067.45

Tokyo – Nikkei 225: UP 0.1 per cent at 20,788.39 (close)

Hong Kong – Hang Seng: FLAT at 27,930.74 (close)

Shanghai – Composite: UP 1.3 per cent at 2,618.23 (close)

Euro/dollar: UP at US$1.1469 from US$1.1447 at 2200 GMT

Pound/dollar: DOWN at US$1.3066 from US$1.3108

Dollar/yen: UP at 109.05 yen from 108.82

Oil – Brent Crude: UP 45 cents at US$61.29 per barrel

Oil – West Texas Intermediate: UP 27 cents at US$54.06