NEW YORK (Reuters) - Stock markets sagged around the world on Friday after the release of U.S. jobs numbers signaled a continued tightening of the labor market and increased inflation pressures, while longer-dated Treasury yields rose.
The increase in non-farm payrolls slowed in September, likely from Hurricane Florence’s impact on restaurant and retail payrolls, but the U.S. Labor Department report also showed a rise in wages that could keep the Federal Reserve on track for more interest rate hikes.
The Dow Jones Industrial Average fell 131.7 points, or 0.49 percent, to 26,495.78, the S&P 500 lost 5.49 points, or 0.19 percent, to 2,896.12 and the Nasdaq Composite dropped 43.12 points, or 0.55 percent, to 7,836.40.
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The pan-European FTSEurofirst 300 index lost 0.73 percent and MSCI’s gauge of stocks across the globe shed 1.00 percent.
A steep sell-off in Treasury bonds that started midweek and pushed 10-year yields to seven-year highs has weighed on stocks and rippled through bond markets globally.
“This week has been a bit of a bloodbath on the fixed income side of things,” said Dean Popplewell, chief currency strategist at Oanda in Toronto. “I think the market moves in the bonds this week sideswiped a lot of individuals.”
The yield on the 30-year Treasury bond reached a four-year high of 3.396 percent, up 4.5 basis points from late Thursday. The benchmark 10-year yield rose to 3.233 percent, up 3.8 basis points from late Thursday, but it had retraced some of those gains by 11 a.m. ET
The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, September 24, 2018. REUTERS/Staff
The U.S. bond market will be closed on Monday for the Columbus Day holiday, though stock markets will open.
In the currency market, the U.S. dollar weakened in choppy trading. The dollar index fell 0.04 percent The euro was down 0.03 percent to $1.151.
The Japanese yen strengthened 0.16 percent versus the greenback at 113.73 per dollar, while Sterling was last trading at $1.3087, up 0.53 percent on the day.
Fears about Italy’s finances pushed Milan stocks down more than 1 percent, while London’s FTSE, Frankfurt’s DAX and the CAC in Paris were off 1.1 to 0.95 percent. [.EU]
West Texas Intermediate (WTI) crude futures rose 44 cents to $74.77 a barrel by 10:46 a.m. EDT (1446 GMT). It was on track for a weekly gain of about 2 percent.
Brent crude futures lost 9 cents to $84.49 a barrel. The contract was on course for a rise of around 2 percent for the week.
“Iranian exports could fall below 1 million barrels per day in November,” U.S. bank Jefferies said, referring to looming U.S. sanctions on Tehran.
The bank said there was enough oil to meet demand, but “global spare capacity is dwindling to the lowest level that we can document... meaning any further supply disruptions would be difficult for the market to manage - and could lead to spiking crude oil prices.”
FILE PHOTO: An electronic board showing the Nikkei share average is seen as market prices are reflected in a glass window at the Tokyo Stock Exchange (TSE) in Tokyo, Japan, February 6, 2018. REUTERS/Toru Hanai
The combination of rising oil prices, borrowing costs and a climbing dollar have also been rocking emerging markets, which tend to be vulnerable to all three.
Emerging market stocks lost 2.38 percent. lost 0.80
Additional reporting by Marc Jones in London, Shreyashi Sayal, Arnab Paul in Bengaluru; Editing by Dan Grebler
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