Low interest rates have been a boon for stock markets for several years.
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The US Labor Department on Friday said that the world’s biggest economy created 271,000 net new jobs in October, nearly twice as many as September, while the unemployment rate fell to a seven-and-a-half year low of 5.0 per cent.
The Dow Jones industrial average fell 199.29 points, or 1.11 per cent, to 17,711.04, the S&P 500 lost 23.59 points, or 1.12 per cent, to 2,075.61 and the Nasdaq Composite dropped 61.86 points, or 1.2 per cent, to 5,085.26. The surprising sign of strength could encourage the Fed to finally start to return interest rates to normal levels. “This all shows how Friday’s employment report possibly changed the game”, John Briggs, head of fixed income strategy at RBS, wrote in a note to investors.
Benchmark 10-year Treasuries notes were down 4/32 in price with a yield of 2.349 per cent. The 10-year yield earlier touched 2.377 per cent, the highest intraday since July 21.
China’s 18.8 percent fall in imports from a year ago, and a 6.9 percent drop in exports, spelled more sluggishness in the world’s second-largest economy and in global growth more generally, hitting commodity prices as well as the shares of companies like Caterpillar which depend on them. Tokyo’s Nikkei 225 was up 2 percent at 19,642.74 as prospects of a rate hike propelled the dollar higher against the yen. Hong Kong’s Hang Seng fell 0.6 percent to 22,726.77.
As the planet’s biggest trader in goods and a key driver of already subdued world growth, the figures will also add to signs the global economy is facing its toughest year since the height of the financial crisis.
A report saying the European Central Bank was forming a consensus to cut its deposit interest rate further into negative territory in December caused the euro to slip against the dollar.
European stock markets fell on Monday as brokers pondered the impact of higher USA rates.
In corporate news, shares of the travel booking company Priceline fell on a weak outlook for the fourth quarter and the oil company Apache fell on reports that it rejected a takeover offer.
“We’ve known about China’s issues for a while now, but this will likely lead to the government doing more stimulus”, said Quincy Krosby, market strategist with Prudential Financial. Citron became well-known earlier this year when it published a report on Valeant, whose stock has fallen by two thirds since the summer.
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ENERGY: Benchmark USA crude gained 58 cents to $44.87 per barrel in electronic trading on the NY Mercantile Exchange. Brent crude, used to price global oils, slipped declined 26 cents to $47.16 a barrel in London. The euro gained to $1.0763 from $1.0742. Gold edged up 40 cents to $1,088.10 an ounce, silver dropped 28 cents, or 1.9 percent, to $14.41 an ounce and copper rose a penny, or 0.5 percent, to $2.23 a pound.
