Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

Gold dips, FTSE 100 volatile after US jobs data

Gold dips, FTSE 100 volatile after US jobs data

European stock markets rallied after a forecast-busting update on the US labour market, only to sink back down again in an unstable end to a volatile week.

With one eye on developments in Ukraine investors sent the FTSE 100 down 0.5% to 6,754, roughly in line with losses across Europe. The UK's blue chip index is heading for its second consecutive weekly loss.

The US S&P 500 rose though, up 0.2%, after the closely-watched US labour market update showed 175,000 new jobs were added to the economy in February, against market expectations of a 149,000 rise.

January’s number was raised from 113,000 to 129,000.

Less positive though was a rise in the unemployment rate to 6.7% from 6.6%, while the three-month average in the rate of growth of non-farm payrolls was the weakest since July 2012.

Economists and investors use the figures to predict whether the US Federal Reserve will continue on its path of reducing its bond-buying stimulus scheme.

Chris Williamson, chief economist at data company Markit, said overall the data ‘adds weight to the belief that the Fed will continue to reduce its monthly asset purchases in $10 billion increments’.

James Knightley of ING Bank had a similar takeaway: ‘With more people in work and these workers earning more money it should be good news for consumer spending and confidence and help cement expectations for ongoing Fed asset purchase tapering.’

The stronger than expected data pushed the gold price lower, down 1.2% to $1,334 per ounce.

FTSE slumps towards weekly loss ahead of US jobs report (09:15)

European share markets pointed lower as investors prepared themselves for this afternoon’s crucial update on the US jobs market.

With no major companies scheduled to report financial updates, Britain’s FTSE 100 fell 0.3% to 6,766, heading towards a loss of some 40 points for the week.

Investors continue to gauge the situation in Ukraine, where US president Barack Obama has urged Russia's Vladimir Putin to seek a diplomatic solution, while news that China has suffered its first corporate bond default also dented the mood. A small Shanghai-based solar power company has defaulted on its interest payments, with concerns about wider ramifications, according to reports.

All eyes though are on US jobs data this afternoon. The unemployment rate is expected to remain steady at 6.6%, while the ‘non-farm payrolls’ report is expected to show that 150,000 jobs were added to the economy in February, after two successive months of disappointing outcomes.

‘A third consecutive month of weak payroll growth in February would raise speculation that the Fed will pause the tapering of its asset purchases,’ speculated Paul Dales of Capital Economics.

Jonathan Sudaria, a dealer at Capital Spreads, said traders were looking towards the figures optimistically: ‘If it’s a bad number, so what, the markets will probably shrug it off and blame it on the weather again as has been evidence by the amount of pundits already making apologies for it. If it’s a good number, well the ability to create jobs despite the weather must be a sign of underlying strength.’

In London, Aviva (AV.L) topped the FTSE 100, adding to Thursday’s gains after the insurer reported a 6% rise in operating profits for 2013 to £2 billion. Shares were up nearly 2% on Friday to 513p.

In currency markets the euro added to steep gains on Thursday after the European Central Bank confounded growing expectations for further policy action. The single currency was trading up 0.1% at $1.3875

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Brewin's Gutteridge: Yuan direction

Brewin's Gutteridge: Yuan direction

This week Brewin Dolphin's research head chats to Fidelity Asian Investment Directors Jenny Lee and Gary Monaghan about the big changes in China.

Play On the Road Challenge: horsing around on the polo pitch

On the Road Challenge: horsing around on the polo pitch

Libby Ashby takes to the polo pitch with Stuart Leigh-Davies from Redmayne-Bentley for an 'On the Road' challenge.

Brewin's Gutteridge: where Miton's Godber sees value

Brewin's Gutteridge: where Miton's Godber sees value

This week Brewin Dolphin's research head talks to George Godber, co-lead fund manager of the Miton UK Value Opportunities fund, about value investing.

Your Business: Cover Star Club

Profile: what tempted Brewin's Glasgow team over to Rathbones?

Profile: what tempted Brewin's Glasgow team over to Rathbones?

Rathbones’ Glasgow office has only been open for three months but the team, led by Angus Kerr, has already attracted new clients

Wealth Manager on Twitter