Wall Street stock futures rose on Friday after fresh data showed that the unemployment rate in the world’s largest economy unexpectedly ticked higher last month.
Labour market figures released before the New York opening bell showed that US employers added 315,000 new jobs in August, down from 528,000 in July but higher than economists’ forecasts of 300,000. However, the unemployment rate stood at 3.7 per cent — higher than expectations of 3.5 per cent.
Futures contracts tracking the broad S&P 500 gauge jumped 0.7 per cent in response, before trimming those gains to trade up 0.2 per cent. Contracts following the Nasdaq 100 — which is stacked with tech shares that are more sensitive to interest rate expectations — also popped initially, later trading up 0.3 per cent.
Jobs data have been closely scrutinised in recent months for clues about how aggressively the US Federal Reserve will tighten monetary policy, with evidence of a hotter labour market fuelling expectations of larger and faster interest rate rises.
Conversely, indications of cooling jobs activity have helped to reduce projections of how far the Fed will opt to jack up borrowing costs, as it strives to strike a balance between quelling rapid price growth and pushing the US economy even further into a protracted slowdown.
European shares extended their gains after the jobs data release across the Atlantic, with the regional Stoxx 600 index adding 1.1 per cent by lunchtime in London — putting the brakes on five straight days of declines.
Those moves came at the end of a gloomy week for global equities. Hawkish rhetoric from Federal Reserve chair Jay Powell at the Jackson Hole Economic Symposium last Friday set the tone for higher borrowing costs to come, stoking worries about rate-setters around the world inducing a deep recession in their efforts to curb inflation.
The Fed lifted rates by 0.75 percentage points in July for the second time in a row, taking its target range to 2.25 to 2.50 per cent. Its next monetary policy meeting will take place in late September.
Concerns about the health of the global economy had been exacerbated on Thursday by the introduction of a new lockdown in the Chinese megacity of Chengdu, as officials stuck to the country’s zero-Covid policy. Weak Chinese manufacturing data, released the same day, rounded out the darkening mood — signalling waning demand and, in turn, a wider slowdown.
In government debt markets, the yield on the 10-year US Treasury note added 0.01 percentage points to 3.28 per cent. The policy-sensitive two-year yield lost 0.03 percentage points to 3.49 per cent, having this week touched its highest point in 15 years. Bond yields rise as their prices fall.
The dollar slipped 0.2 per cent lower against a basket of six peers, but continued to hover around its highest level in two decades. The greenback has been elevated in recent months by its traditional status as a haven currency, and expectations of higher borrowing costs in the US while economic conditions worsen in the UK and Europe on the back of an escalating energy crisis.