World stocks retreat on jobs data, rising dollar
NEW YORK (Reuters) – Shares from Asia to Europe retreated on Wednesday, while the dollar rose and Wall Street opened down following disappointing U.S. employment data.
The pan-European STOXX 600 index lost 0.21%, reversing an earlier gain on Wednesday of 0.5%, with Frankfurt shares climbing 1% to a record high.
U.S. private employers hired fewer workers than expected in February, which surprised investors, as did the reaction across bond markets, which fell instead of rise, said Robert Francello, vice president of equity sales and trading for Wedbush Securities.
“It’s letting the bond market go and is weighing on the Nasdaq,” Francello said.
The employment data suggested the labor market was struggling to regain speed despite the nation’s improving public health picture.
MSCI’s gauge of stocks across the globe gained 0.02%.
The Dow Jones Industrial Average rose 78.4 points, or 0.25%, to 31,469.92, the S&P 500 lost 9.8 points, or 0.25%, to 3,860.49 and the Nasdaq Composite dropped 100.85 points, or 0.75%, to 13,257.94.
Emerging market stocks rose 1.43%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.73% higher, while Japan’s Nikkei rose 0.51%.
U.S. services industry activity unexpectedly slowed in February amid winter storms, while a measure of prices paid by companies for inputs surged to the highest level in nearly 12-1/2 years, bolstering expectations for faster inflation in the near term.
The U.S. Senate is expected to take up Biden’s $1.9 trillion coronavirus relief package on Wednesday, with Democrats aiming to get it signed into law before March 14, when some current jobless benefits expire. That is spurring investor optimism that more imminent U.S. stimulus will energize the global economic recovery.
The equities retreat came as benchmark U.S. government bond yields moved higher after declining for three straight days. Benchmark 10-year notes last fell 19/32 in price to yield 1.4808%, from 1.415%.
Euro zone government bond yields were little changed, with the benchmark German 10-year Bund yield flat at -0.34%. It spiked last week to -0.203%.
U.K. Finance minister Rishi Sunak announced a costly extension of his emergency aid programs to see Britain’s economy through its current coronavirus lockdown, but announced a tax hike for many businesses as he began to focus on fixing public finances.
The dollar gained as investors priced for strong U.S. growth relative to other regions, while the safe-haven Japanese yen continued to weaken to a seven-month low.
The dollar index rose 0.04%, with the euro down 0.12% to $1.2074.
Brazil’s economy, the largest in Latin America, shrank last year by 4.1% amid the pandemic, data showed on Wednesday, the worst drop in decades, but not as much as originally expected due to cash transfers to the poor.0.780
Bitcoin jumped 6.6% to $50,607.39 and to its highest in a week.
Spot gold dropped 1.0% to $1,721.01 an ounce. U.S. gold futures fell 1.37% to $1,709.40 an ounce.
Oil prices rose, boosted by expectations that OPEC+ producers might decide against increasing output when they meet this week.
U.S. crude recently rose 2.54% to $61.27 per barrel and Brent was at $63.99, up 2.06% on the day.
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