U.S. and Canadian stocks plunged at the open, as traders were caught off guard by the severity of the slowdown in labour market growth portrayed in the U.S. nonfarm payrolls report for March.
Economically sensitive commodities also tanked, but gold rallied as traders ran to the haven asset for cover.
The Canadian jobs report, issued at the same time, was also surprisingly weak, sending the loonie into a tailspin. It lost nearly a full cent on this morning's economic data.
Now, equity markets are weighing whether the latest jobs figures should prompt a prolonged correction for U.S. stocks that have risen very quickly to all-time highs - or whether it's simply a bump on the road to higher levels.
The comforting part for investors is that the weak U.S. job reading suggests there will be no quick withdrawal of quantitative easing measures by the Federal Reserve.
In early trading, the S&P/TSX composite index was down 104 points, or 0.8 per cent, at 12,258; the S&P 500 was down 20 points, or 1.2 per cent, at 1,540; and the Dow Jones industrial average was off 151 points, or 1 per cent, at 14,457.
The most active crude oil futures contract in New York was down 85 cents, or 0.9 per cent, at $92.40 after earlier dipping to a low of $91.91 per barrel.
Copper was down 0.3 per cent, and gold was up $14, or 0.9 per cent, at $1,566.50 per ounce.
The U.S. created just 88,000 jobs in March, far from the 180,000 that economists had forecast, although the unemployment rate dipped to 7.6 per cent. It was the smallest gain in jobs in nine months, and in another worrisome sign, more people dropped out of the labour force.
The data provided the most significant evidence to date that the rate of hiring in the U.S. is slowing and that tax increases and spending cuts that have kicked in recent months are taking their toll. Some economists had been scaling back their forecasts for March job growth in recent days, particularly after week readings earlier this week on initial jobless claims and private payroll employment. But even many of the more pessimistic were expecting a better reading than what the nonfarm payrolls report provided.
Another U.S. economic report this morning wasn't nearly as dismal. The U.S. Commerce Department said the nation's trade deficit narrowed 3.4 per cent in February to $43.0-billion from $44.5-billion in January, as crude oil imports fell to their lowest level since March 1996. Economists, by contrast, had expected the deficit to widen to $45.0-billion.
In Canada, the trade deficit with the world widened to $1-billion in February from $746-million in January, as exports fell 0.6 per cent on a drop in metal and mineral shipments. But the big focus here was on the Canadian employment report, which showed the country lost 55,000 jobs in March as the jobless rate climbed back to 7.2 per cent. That reversed an increase during the previous month.
The Canadian dollar headed straight south on the news, and by 930 a.m. (ET), was down nearly a cent at 97.90 (U.S.).
In Europe this morning, traders had another concern: Retail sales for the euro zone fell 0.3 per cent in February from the previous month. Airline stocks took a particularly harsh beating, as investors worried that an outbreak of bird flu in China could cut into travel demand. A new strain of the bird flu has so far caused six deaths. Stock indexes in France, Germany and London are all down about 2 per cent.
In Asia overnight, the Nikkei surged to a 4.5-year high, extending gains from Thursday after the Bank of Japan unleashed $1.4-trillion in stimulus. Other indexes, especially the Hang Seng, ended lower, as traders cut their equity exposure ahead of this morning's U.S. jobs report. The Hong Kong index closed down 2.7 per cent.