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Global stock markets shrugged off a dismal earnings report from Fannie Mae early on Friday, though Canadian investors will more likely be concerned with a dismal report of their own, in the form of steep job losses.

U.S. stock index futures were relatively unchanged with about an hour before markets open. Futures for the Dow Jones industrial average fell 2 points, to 11,437. Futures for the broader S&P 500 fell less than 1 point, to 1267.

In Europe, the U.K.'s FTSE 100 and Germany's DAX index each fell 0.4 per cent in afternoon trading. In Asia, Japan's Nikkei 225 rose 0.3 per cent in afternoon trading.

Fannie Mae, the mortgage finance company, reported its fourth straight loss - this one coming in at $2.3-billion (U.S.) or $2.51 a share, far worse than expected. Analysts had expected a loss of 72 cents a share. Fannie Mae also cut its dividend, again, to 5 cents a share from 25 cents a share, after cutting it earlier from 50 cents a share. So far, though, investors are taking the bad news in stride: Fannie's share price fell 12.5 per cent in premarket activity, but other financial firms are holding up.

In Canada, investors have another concern to worry about, particularly as it affects the Canadian dollar. Statistics Canada reported that 55,200 jobs disappeared in July, the second month in a row of job losses; in June, employers slashed 5,000 jobs. However, the unemployment rate improved slightly, to 6.1 per cent from 6.2 per cent - but only because discouraged job-seekers left the labour force.

While the scale of the job losses was severe, what is particularly surprising is that no one saw it coming: Economists predicted the economy would generate 5,000 new jobs in the month. So far, the biggest casualty appears to be the Canadian dollar, which plunged 1.2 per cent, to 93.8 cents (U.S.) against the U.S. dollar.

"Today's report provides strong evidence that labour markets are starting to succumb to weakening GDP growth," said Paul Ferley, assistant chief economist at Royal Bank of Canada, in a note. "Though the Bank of Canada has recently put greater emphasis on the risk of inflation pressures taking hold in the economy, today's report will re-establish the downside risks to growth as of equal concern."


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