US stock futures dropped on Friday after jobs growth in the world’s largest economy unexpectedly accelerated, damping expectations that the Federal Reserve will soon stop raising interest rates.
Government bonds also sold off heavily, reversing part of the previous day’s large gains.
Contracts tracking Wall Street’s blue-chip S&P 500 fell 1 per cent after the payrolls report while those tracking the tech-heavy Nasdaq 100 dropped 1.6 per cent. Amazon, Alphabet and Apple fell 5 per cent, 4 per cent and 2 per cent respectively in pre-market trading after they reported their earnings for the final three months of 2022 late on Thursday.
Leading central banks this week lifted interest rates to their highest levels since the global financial crisis, yet investors rushed into equities and bonds after officials hinted that the current cycle of monetary tightening may be nearing its end. But Friday’s monthly jobs figures, which suggest the US economy remains resilient despite a dramatic rise in rates over the past year, punctured some of the optimism.
The US added 517,000 jobs in January, much higher than the 185,000 anticipated by Wall Street economists. The economy added 260,000 in December. The jobless rate fell to 3.4 per cent from 3.5 per cent the previous month.
Europe’s Stoxx 600 share index slipped 0.4 per cent on Friday afternoon, with Germany’s Dax falling 0.8 per cent, although London’s FTSE 100 rose 0.4 per cent.
The moves come after the Bank of England and European Central Bank on Thursday lifted rates by 0.5 percentage points, and with the Federal Reserve having increased its main policy rate by a quarter of a percentage point on Wednesday.
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