Global markets mixed as Wall Street stumbles on surprisingly strong US jobs report

Investor sentiment remains cautious as earnings season, which is in full swing, is unlikely to settle the debate between bulls and bears

Federal Reserve chairman Jerome Powell appears on a screen on the trading floor of the New York Stock Exchange. The US central bank on Wednesday delivered a smaller interest rate increase in its historic fight against inflation, while also indicating that more increases are to come. ReutersShow less

Global stock markets ended the week on a mixed note, with Wall Street stumbling on a surprisingly strong US jobs report that raised concerns on the Federal Reserve continuing to raise interest rates.

US employers added a better-than-expected 517,000 jobs in January, far exceeding a Reuters estimation of 185,000, underlining the labour market's resilience despite aggressive actions from the Fed to tame inflation.

The unemployment rate also inched down from 3.5 per cent to 3.4 per cent, which was a new 53-year low.

The US central bank on Wednesday delivered a smaller interest rate increase in its historic fight against inflation, prompting stocks to rally. It raised interest rates by 25 basis points, while also indicating that more increases are to come.

"We had a mind-blowing number for US nonfarm payrolls; the reading was so good that many had to check the reading twice to make sure that there was nothing wrong there," said Naeem Aslam, chief market analyst at AvaTrade.

As a result, "traders are concerned that the Fed may adopt a more hawkish monetary policy given the strength of the labour market and their target of inflation reading".

At the close of trading in New York, the Dow Jones Industrial Average shed 0.4 per cent, the S&P 500 declined 1 per cent and the tech-heavy Nasdaq Composite retreated 1.6 per cent.

That marked a slowdown to the big rally Wall Street had posted at the beginning of 2022. For the week, the Dow declined 0.2 per cent, while the S&P still rose 1.6 per cent.

The Nasdaq was jolted by weak earnings reports from influential technology companies this week. Amazon was the biggest lag, falling 8.4 per cent despite beating revenue projections, while Google's parent company Alphabet declined 2.7 per cent as it missed estimates.

Apple, however, prevented more market declines, rising 2.4 per cent despite missing revenue forecasts on lower iPhone sales.

Still, the index surged 3.3 per cent in the week, its fifth straight weekly gain and the longest such streak since late 2021.

For the year, the Dow, S&P 500 and Nasdaq have gained 2.3 per cent, 7.7 per cent and 14.7 per cent, respectively.

"Investor sentiment remains cautious. The earnings season is in full swing, but it is unlikely to settle the debate between bulls and bears," Yves Bonzon, group chief investment officer at Julius Baer, wrote in a note.

In Europe, London's FTSE 100 and Paris' CAC 40 settled about 1 per cent higher at the close of trading, while Frankfurt's DAX declined 0.2 per cent.

Earlier in Asia, Tokyo's Nikkei 225 ended up 0.4 per cent. Hong Kong's Hang Seng Index and the Shanghai Composite declined 1.4 per cent and 0.7 per cent, respectively.

We had a mind-blowing number for US nonfarm payrolls; the reading was so good that many had to check the reading twice to make sure that there was nothing wrong there

Naeem Aslam,
chief market analyst at AvaTrade

The dollar gained after the US jobs report, rising from a Thursday's nine-month to hit 103.01 on Friday, its highest since January 12.

In commodities, oil prices settled lower on Friday, posting a second weekly loss and its lowest in three weeks, as a volatile session reflected investor concerns on higher interest rates.

Traders also kept an eye on the embargo on Russian petroleum products agreed upon by the EU, G7 and Australia, as well as signs that an economic recovery is underway in top crude importer China.

Brent fell $2.23, or 2.71 per cent, to $79.94 a barrel at the close of trading on Friday, while West Texas Intermediate lost $2.49 to settle 3.28 per cent lower at $73.39 a barrel.

Gold for April delivery, meanwhile, declined $54.20 to $1,876.60 an ounce.

Demand for the safe-haven precious metal rose by 18 per cent in 2022 to an 11-year high of 4,741 tonnes, driven by retail investors and central banks shoring up their bullion reserves, the World Gold Council said in its annual report released this week.