Wall Street rises after solid jobs data; oil drops on freeze doubts

Dollar rebound against major currencies

Stocks on Wall Street edged up on Friday on better-than-expected US jobs and factory data, suggesting stronger corporate earnings ahead, but a gloomy manufacturing report in Japan knocked other global equity markets lower and crude oil prices fell.

European shares pared losses and US stocks rose on reports that showed US employment increased solidly in March and manufacturing activity expanded last month for the first time in six months on a surge in new orders.

Nonfarm payrolls increased 215,000 and the unemployment rate rose to 5.0 percent from an eight-year low of 4.9 percent, the US Labor Department said. The jobless rate rose as more people continued to seek work, a sign of confidence in the jobs market.

Still, economists see limited impact on US monetary policy in the near-term from the data after Federal Reserve Chair Janet Yellen’s remarks earlier in the week indicated she favored a cautious stance toward interest rate hikes this year.

The Dow Jones industrial average rose 46.16 points, or 0.26 percent, to 17,731.25. The S&P 500 gained 3.88 points, or 0.19 percent, to 2,063.62 and the Nasdaq Composite added 23.07 points, or 0.47 percent, to 4,892.92.

Oil futures fell about 4 percent to below $39 per barrel, with the market growing increasingly skeptical that a looming deal to freeze crude production can help clear a global glut.

Saudi Arabia will freeze its oil output only if Iran and other major producers do so, Saudi Deputy Crown Prince Mohammed bin Salman told Bloomberg in an interview.

Brent crude for June delivery fell $1.58 to $38.75 a barrel. US crude fell $1.42 to $36.92 a barrel.

A gloomy Japanese manufacturing report kept a damper on global equity markets. Business sentiment among Japan’s big manufacturers deteriorated to the lowest in nearly three years and is expected to worsen in the coming quarter, a closely watched central bank survey showed on Friday.

The survey heightened pressure on Prime Minister Shinzo Abe and the Bank of Japan to do more to shore up the ailing economy.

Japanese stocks tumbled 3.6 percent to a one-month low.

Shares in Europe also slid to a onemonth low, with the pan-European FTS-Eurofirst 300 index closing down 1.5 percent at 1,306.69.

MSCI’s all-country world stock index fell 0.69 percent.

The US dollar rebounded against a basket of currencies from more than fivemonth lows on Thursday. The strongerthan-expected US jobs and factory data boosted expectations for a less dovish Federal Reserve.

The dollar index was last at 94.607 after hitting a session low of 94.334.

The euro turned negative against the greenback and hit a session low of $1.1335 after the data.

The dollar was last down 0.28 percent against the yen at 112.25 yen.

US

Wall Street was slightly higher on Friday after data pointed to strength in the US labor market and a rebound in the manufacturing sector.

Gains were limited by a nearly 4 percent fall in crude prices amid increasing skepticism around a deal to freeze crude production.

The Labor Department’s report showed solid gains in nonfarm payrolls in March. Unemployment rate rose to 5 percent from an eight-year low of 4.9 percent as more Americans entered the labor force.

A separate report showed the US manufacturing sector resumed growth in March, bolstered by strength in new orders, suggesting stronger corporate earnings ahead.

Traders are pricing in only one hike in 2016, but the odds are now about a onein-three chance of a hike in June, and a better-than-even chance of one by September, based on the price of Fed funds futures contracts.

At 12:35 pm ET (1635 GMT), the Dow Jones industrial average was up 22.06 points, or 0.12 percent, at 17,707.15, the S&P 500 was up 0.12 points, or 0.01 percent, at 2,059.86 and the Nasdaq Composite was up 10.21 points, or 0.21 percent, at 4,880.06.

Five of the 10 major S&P sectors were higher. The healthcare sector rose 0.63 percent, boosted by Regeneron.

The drugmaker’s shares were up 12.3 percent at $404.83 after its experimental treatment for eczema was found to be highly effective in two large studies.

The S&P energy sector was down 1.7 percent. Chevron was off 1.4 percent and weighed the most on the Dow, while Exxon fell 1 percent and was the biggest drag on the S&P.

Europe

European stocks slumped Friday on the first day of the second quarter as falling oil prices, new economic concerns in Japan and a solid US jobs data hurt sentiment.

Analyst Alexandre Baradez at IG France said the markets’ “first reaction was defensive”, fearing the good jobs results would encourage the Fed to move faster with rate hikes after all.

Interest rate hikes are generally negative for stocks.

However once investors spent more time looking at the jobs data and decided that it will unlikely shift Yellen from her dovish stance, stocks began to recover from their intraday lows.

Frankfurt and Paris stock markets still ended down over one percent, while London slid 0.5 percent. Key figures around 1730 GMT London — FTSE 100: Down 0.5 percent at 6,146.05 points (close)

Frankfurt — DAX 30: Down 1.7 percent at 9,794.64 (close)

Paris — CAC 40: Down 1.4 percent at 4,322.24 (close)

EURO STOXX 50: Down 0.7 percent at 2,984.36

UK

Britain’s top equity index fell on Friday, dipping at the start of the second quarter of 2016 as weak oil prices weighed on the shares of major energy companies.

The blue-chip FTSE 100 index closed down 0.5 percent at 6,146.05 points.

The FTSE and other European stock markets stayed in negative territory after US jobs data was published.

Some traders pointed to the fact that the US unemployment rate increased to 5.0 percent from an eight-year low of 4.9 percent as making it more likely that the US may refrain from further interest rate rises in the near future, while also taking the shine off the generally solid-looking US data.

Afsar added he would look to sell positions on the FTSE for a profit if the FTSE moved up to the 6,245 point level, given the uncertain global economic backdrop.

A drop in oil prices added further pressure to the FTSE 100 by pushing down the shares of BP and Royal Dutch Shell , with investors growing increasingly sceptical that a looming deal to freeze crude production could clear a global glut in the oil market.

Asia

Tokyo stocks plunged Friday to lead losses across Asian stock markets after a closely watched survey showed confidence at Japan’s top manufacturers had fallen to a three-year low.

A surprise jump in a gauge of Chinese manufacturing helped Shanghai post a late gain although investors were jolted by news that Standard & Poor’s had lowered its credit rating outlook on China to negative.

The Bank of Japan’s quarterly Tankan report of 10,000 firms showed sentiment plunged in January-March to plus six from 12. The survey marks the difference between the percentage of firms that are upbeat and those that see conditions as unfavourable. Forecasts had been for a reading of plus eight.

Tokyo’s Nikkei index plunged 3.6 percent, with a stronger yen also hitting exporters.

There were sharp losses across Asia, with Hong Kong down 1.3 percent down and Sydney 1.6 percent lower at the close. Seoul, Singapore and Wellington were also heavily sold off.

However, Shanghai ended the day with a 0.2 percent gain thanks to end-of-day buying ahead of a long holiday weekend.

News of a shock surge in the official March purchasing managers index of China’s factory activity did little to support prices through most of the day until a late flurry saw the Shanghai market post a gain.

The PMI showed growth for the first time since June and followed seven successive months of contraction, fuelling hopes that a long-running growth slow- down in China’s economy could be easing. The reading also came after the index hit a four-and-half-year low in February.

China’s economy, a vital driver of global expansion, grew 6.9 percent last year, its weakest rate in a quarter of a century and the government has targeted 6.5 percent this year. Key figures around 0805 GMT Tokyo — Nikkei 225: Down 3.6 percent at 16,164.16 (close)

Shanghai — Composite: Up 0.2 percent at 3,009.53 (close)

Hong Kong — Hang Seng: Down 1.3 percent at 20,498.92 (close)

Oil

Oil futures fell almost 4 percent to below $39 per barrel on Friday, with the market growing increasingly sceptical that a looming deal to freeze crude production can help clear a global glut.

Gains in the dollar after stronger-thanexpected US non-farm payrolls data also hit dollar-traded oil by making the commodity less affordable to holders of other currencies.

Saudi Arabia will freeze its oil output only if Iran and other major producers do so, Saudi Deputy Crown Prince Mohammed bin Salman told Bloomberg in an interview, helping push prices lower earlier in the day.

Brent crude for June delivery fell $1.48 to $38.85 a barrel as of 1330 GMT, down 3.8 percent. Brent rose 6 percent in the first quarter of this year, its first such increase since a 15 percent rally in the second quarter of 2015.

US crude fell $1.43 to $36.91 a barrel. Prices rose almost 4 percent over January-March, also the first quarterly gain since surging nearly 25 percent in the second quarter of last year.

A Reuters monthly survey showed this week that OPEC output rose in March on higher supply from Iran after the lifting of sanctions and near-record exports from southern Iraq.

Oil prices fell despite China’s official Purchasing Managers’ Index showing an unexpected expansion in March, the first in nine months.

Putting a floor under prices in earlier trade was a drop in US crude output, falling for a fourth straight month in January to the lowest since October 2014.

Gold

Gold fell more than 1 percent on Friday after US payrolls data for March beat expectations, allaying some fears over the health of the US economy and stoking speculation that the Federal Reserve may press ahead with interest rate hikes this year.

Spot gold was down 1.4 percent at $1,214.66 an ounce at 1330 GMT, having earlier touched a low of $1,213.10, while US gold futures for June delivery were down $18.90 an ounce at $1,216.50.

The metal saw its biggest quarterly rise in nearly 30 years in the three months to March, rallying more than 16 percent as expectations faded that the Fed would move to normalise interest rates after their first increase in nearly a decade in December.