Stock markets dipped around the world on Friday after U.S. jobs numbers signaled a continued tightening of the labor market and increased inflation pressures, while Treasury yields rose to multi-year highs.
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.
“Good news for economy is bad news for equity investors right now,” said Michael Geraghty, equity strategist at Cornerstone Capital Group’s in New York.
The Dow Jones Industrial Average fell 178.8 points, or 0.67 per cent, to 26,448.68, the S&P 500 lost 16.04 points, or 0.55 per cent, to 2,885.57 and the Nasdaq Composite dropped 91.06 points, or 1.16 per cent, to 7,788.45.
Canada’s main stock index also fell on Friday, despite gains in industrial and health care shares and strong jobs data.
The Toronto Stock Exchange’s S&P/TSX composite index was down 60.50 points, or 0.38 per cent, at 15,946.17.
The industrials sector rose 0.6 per cent, as Canadian Pacific Railway climbed 2 per cent. Rival Canadian National Railway Co. increased 0.6 per cent.
A 5.4-per-cent jump in Aurora Cannabis Inc. led the health care sector higher.
The energy sector was down 1.6 per cent. Suncor Energy Inc. and Canadian Natural Resources Ltd. both lost 1.9 per cent.
Ensign Energy Services fell 8 per cent, the most on the TSX, after Precision Drilling trumped a hostile bid from the oilfield service provider to buy smaller rival Trinidad Drilling.
Statistics Canada data showed the economy added 63,300 jobs in September, more than twice as many as analysts had forecast, and the jobless rate edged down to 5.9 per cent.
The pan-European FTSEurofirst 300 index lost 0.86 per cent and MSCI’s gauge of stocks across the globe shed 0.70 per cent.
A steep sell-off in U.S. 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 side-swiped a lot of individuals.”
The 30-year Treasury bond reached a four-year high of 3.424 per cent, up 7 basis points from late Thursday. The benchmark 10-year yield rose to 3.248 per cent, up 5.3 basis points from late Thursday.
The U.S. bond market will be closed on Monday for the Columbus Day holiday, but stock markets will open.
In the currency market, the U.S. dollar weakened in choppy trading. The dollar index fell 0.09 percent. The euro was up 0.06 percent to $1.152.
The Japanese yen strengthened 0.11 per cent versus the greenback at 113.81 per dollar, while Sterling was last trading at $1.3104, up 0.66 per cent on the day.
Fears about Italy’s finances pushed Milan stocks down 1.3 per cent, while London’s FTSE, Frankfurt’s DAX and the CAC in Paris were off 0.95 to 1.4 per cent.
In oil, Crude futures settled up for the week as U.S. unemployment data eased concerns about demand in the world’s top oil consumer and ahead of U.S. sanctions on Iranian oil exports.
For the day, U.S. crude futures settled at $74.34 per barrel, up 0.001 per cent, and Brent settled at $84.16, down 0.50 per cent.
At around four-year highs, oil prices have triggered concerns about demand as U.S. President Donald Trump has blamed the Organization of the Petroleum Exporting Countries for rising gasoline prices for American consumers.
Prices have eased slightly after Saudi Arabia and Russia said they would raise output to at least partly make up for expected disruptions from Iran, OPEC’s third-largest producer, due to the sanctions that take effect on Nov. 4.
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 1.01 per cent, putting them on track to close at a 17-month low.