Breaking News
Translate

European stocks drop ahead of US employment report

EUROPEAN stocks were lower Friday, with investors adopting a cautious stance and booking profits ahead of the pivotal U.S. employment report after disappointing economic data Thursday dented investors’ appetite for risk.
“It appears that some investors are still nervous about the overall state of the world economy, deciding to play safe and take profits ahead of the U.S employment report,” said analysts at ODL Securities.Thursday’s U.S. economic data did little to calm the jitters, said Ian Williams, strategist at Altium Securities.

“The recovery is continuing, but the pace may just be moderating, which does present some short_term downside risk to share prices that may have run a little too far ahead of reality,” he said.At 0735 GMT, the Dow Jones Stoxx 600 index was down 1.3% at 235.49, London’s FTSE 100 index was off 0.7% at 5008.32, Frankfurt’s DAX index lost 0.9% at 5504.75, and the CAC_40 index in Paris was 1.3% lower at 3671.20.

Traders were waiting for the release of the U.S. nonfarm payrolls report for September at 1230 GMT, hoping for further clues to the state of the U.S. labor market following disappointing ISM manufacturing data Thursday. Economists surveyed by Dow Jones Newswires on average expect the payrolls report to show 175,000 jobs shed in September, with the unemployment rate rising to 9.8%.

“It’s unlikely we will be seeing investors buying into morning weakness as they hold off until this afternoon [for the payrolls report]. A weak figure could signal the end of the recent rally and offer hope to the bears that their correction isn’t too far away,” said traders at Spreadex.

Meanwhile, corporate activity was thin on the ground, with few earnings reports to offer stocks meaningful direction. But basic resource stocks declined as base metal prices fell. Also affecting the sector, the U.K. Takeover Panel ruled Friday that Anglo_Swiss mining company Xstrata (XTA.LN) must “put up or shut up”, and formalize its offer for rival Anglo American (AAL.LN) by Oct. 20 or walk away from the deal.

Shares in Xstrata declined 2.4%, while shares in Anglo American fell 1.0%. The pan_European Dow Jones Stoxx 600 basic resource index lost 2.0% to 379.63.On Wall Street Thursday, stocks suffered their worst decline in about three months as a disappointing report on manufacturing led to a broad selloff for many of the companies that led the third_quarter advance.

Overall, the Dow Jones Industrial Average closed down 203 points, or 2.1%, to 9509.28, marking its biggest point and percentage drop since July 2. The Standard & Poor’s 500 index  lost 27.23, or 2.6%, to 1029.85. The Nasdaq Composite fell 64.94, or 3.1%, to 2057.48.

Setting Thursday’s tone, a report on manufacturing activity restoked fears that a rally of more than six months in the stock market may have left it overextended. Notably, some of the most economically sensitive sectors, those that had paced the market to its best quarterly performance since 1998 in the third quarter, were its weakest.

The negative tone on Wall Street put Asian stocks markets under pressure, with the region’s bourses sharply lower Friday. Japanese automakers were hit by weak U.S. sales data and the strong yen. Japan’s Nikkei 225 was down 2.5% and Hong Kong’s Hang Seng index lost 2.8%. South Korean and Chinese markets were closed.

European stocks drop ahead of US employment report European stocks were lower Friday, with investors adopting a cautious stance and booking profits ahead of the pivotal U.S. employment report after disappointing economic data Thursday dented investors’ appetite for risk.

“It appears that some investors are still nervous about the overall state of the world economy, deciding to play safe and take profits ahead of the U.S employment report,” said analysts at ODL Securities.Thursday’s U.S. economic data did little to calm the jitters, said Ian Williams, strategist at Altium Securities. “The recovery is continuing, but the pace may just be moderating, which does present some short_term downside risk to share prices that may have run a little too far ahead of reality,” he said.

At 0735 GMT, the Dow Jones Stoxx 600 index was down 1.3% at 235.49, London’s FTSE 100 index was off 0.7% at 5008.32, Frankfurt’s DAX index lost 0.9% at 5504.75, and the CAC_40 index in Paris was 1.3% lower at 3671.20.
Traders were waiting for the release of the U.S. nonfarm payrolls report for September at 1230 GMT, hoping for further clues to the state of the U.S. labor market following disappointing ISM manufacturing data Thursday. Economists surveyed by Dow Jones Newswires on average expect the payrolls report to show 175,000 jobs shed in September, with the unemployment rate rising to 9.8%.

“It’s unlikely we will be seeing investors buying into morning weakness as they hold off until this afternoon [for the payrolls report]. A weak figure could signal the end of the recent rally and offer hope to the bears that their correction isn’t too far away,” said traders at Spreadex.


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.