Global stock markets drop, US yields rise after strong employment data


  • Wall Street shares closed lower
  • Standard 10-year yields hit a 2-week high
  • US jobs report for May beat expectations
  • US dollar index extends gains
  • Oil price hike

NEW YORK (Reuters) – Global stock markets fell with US Treasury yields hitting a two-week high on Friday after data showed that the US economy generated more jobs than expected in May, indicating that the Federal Reserve is likely to continue. Raising interest rates in an effort to reduce inflation.

The closely watched Labor Department employment report showed that the US economy added 390,000 jobs in May, with the unemployment rate holding steady at 3.6% for the third month in a row, topping most analyst estimates. Read more

Traders were hoping that the jobs report would reveal stronger signs of weakness in the US economy that would help persuade the Fed to soften its stance on inflation and interest rates to avoid triggering a recession.

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“It’s been strength in all areas except retail, and the economy on the jobs front continues to advance,” said Josh Wynne, portfolio manager at Hennessy Funds in Chapel Hill, North Carolina. “The Fed unfortunately still needs to destroy a bit of demand and will continue to do so for at least the next few meetings with a 50bp rate hike.”

MSCI World Stock Index (.MIWD00000PUS), which measures stocks in 50 countries, is down 1.14%. Pan-European STOXX 600 Index (.stoxx) It was down 0.26%.

US Treasury yields advanced to their highest in two weeks after the strong jobs data. The benchmark 10-year note is up 2.946%, while the rate-sensitive two-year note is up 2.6606%.

On Wall Street, the three major indices closed lower, led by sell-offs in the technology, consumer appreciation, telecom services, and financial and industrial sectors. Read more

Dow Jones Industrial Average (.DJI) The S&P 500 fell 1.05% to 32,899.7 (.SPX) It lost 1.63% to 4108.54 and the Nasdaq Composite Index (nineteenth) It fell 2.47% to 112012.73.

“Some of the rally (in equities) recently has been due to the Fed recognizing that in the fall it could reevaluate and maybe pause. But the market is tracking some of its past losses and saying that’s all off the table,” Wayne said.

The US dollar rose against a basket of currencies after the employment report. The dollar index rose 0.393%, with the euro slipping 0.25% to $1.0718. Read more

Oil prices stabilized higher, buoyed by expectations that OPEC’s decision to increase production targets a little more than planned will not significantly affect tight global supplies and increase demand as China eases restrictions related to the Covid-19 epidemic. Read more

Brent crude rose 1.8 percent to settle at $119.72 a barrel, and US West Texas Intermediate crude rose 1.7 percent to $118.87. Both benchmarks rose more than $3 in trading after the close.

Gold prices fell nearly 1% after the allure of bullion was affected by the rise in the US dollar and Treasury yields after the strong jobs data.

Spot gold fell 0.9% to $1,850.57 an ounce, while US gold futures were down 0.99% to $1,848.10 an ounce.

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(Shibuike Ujh Report) From New York. Editing by Jonathan Otis and Will Dunham

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