On 05 February, 2016 – Stocks were mostly lower for the day and week

US and European shares tumbled after the release of the US employment report. 

United States

Stocks posted steep losses Friday, ending the week with broad declines after a report showed that job creation slowed in January. Technology stocks fell especially hard. The Dow Jones industrials were down 1.3 percent on the day and 1.6 percent on the week. The S&P declined 1.8 percent and 3.1 percent on the week. Nasdaq tumbled 3.2 percent Friday and 5.4 percent for the week. Stocks were mostly lower throughout day, but losses accelerated near the end of trading.

The employment growth slowed to 151,000 jobs after increasing a revised 262,000 in December. However, the report contained many positive elements. Unemployment dropped below the 5 percent level to 4.9 percent, the lowest level since February 2008. The participation rate edged upward. Average wages jumped 2.5 percent from last year, evidence that the past years of job growth are helping to generate larger pay raises.

Energy and consumer discretionary stocks fell as oil prices declined and investors continued to worry about slow growth. LinkedIn’s losses wiped out nearly $11 billion in the professional networking site’s market value. The company issued a forecast for slower growth this year and shares fell more than 40 percent. Several analysts noted that LinkedIn had a track record of issuing conservative forecasts and later beating them, but this time investors were shaken by the company’s financial guidance. Red Hat, Netflix, Amazon and Expedia turned in some of the internet sector's worst performances. Substantial weakness was also visible among software stocks. Airline, semiconductor, networking and housing stocks also retreated while gold stocks were among the few groups to buck the downtrend.

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$6.00 to US$1,150.35. Copper futures were down 1.3 percent to US$2.10. WTI spot crude was down 83 US cents to US$30.89. Dated Brent spot crude was down 40 US cents to US$34.06. The US dollar was up against the euro, pound, yen and the Canadian and Australian dollars. However, it declined against the Swiss franc. The Dollar Index was up 0.5 percent. The yield on US Treasury 30 year bond was down 2 basis points to 2.67 percent while the yield on the 10 year note slipped 1 basis point to 1.84 percent.

Europe

Stocks here were mostly lower Friday after the US employment report for January showed weaker than expected job growth and German factory orders declined more than expected. Investors also were confronted by a large number of corporate earnings results. The FTSE declined 0.9 percent, the CAC was down 0.7 percent, the DAX lost 1.1 percent and the SMI was 0.5 percent lower. For the week, the indices tumbled 3.9 percent, 4.9 percent, 5.2 percent and 4.3 percent respectively.

The European Central Bank is ready to add more stimulus in March if needed, but only after a thorough study of available data in order to avoid reacting hastily to temporary developments, Governing Council member and governor of the Bank of Slovenia Bostjan Jazbec said Friday. In an interview he said that ECB policymakers required a "more comprehensive view on data". Policymakers should not jump immediately on events which might or might not prove to be long lasting, he added.

Daimler advanced a day after it reported record sales of Mercedes-Benz cars and forecast slowing growth in 2016. Fresenius Medical Care and Fresenius were down. Commerzbank and Deutsche Bank increased. In Paris, BNP Paribas gained after the lender unveiled plans to cut investment banking costs by 12 percent by 2019 after reporting sharply lower net profit for the fourth quarter. Crédit Agricole and Société Générale were up on the day.

E.ON and RWE advanced. Technip increased. In London, BG Group gained. The oil & gas firm, which is being taken over by Royal Dutch Shell, reported a 22 percent drop in underlying earnings for the fourth quarter due to lower revenues. Royal Dutch Shell shares gained. Shaftesbury slipped after the property investment company said it has enjoyed robust footfall numbers and spending during the period 1 October 2015 to 4 February 2016. ArcelorMittal dropped 5.53 percent in Amsterdam. The company unveiled plans to raise $3 billion in fresh capital after reporting a net loss of almost $8.0 billion for 2015.

Germany's factory orders declined more than expected in December on weak domestic orders while foreign demand logged only marginal growth. Orders declined 0.7 percent on the month for the first decrease in three months.

Asia Pacific

Asian shares closed mostly higher Friday. An exception was the Nikkei. It succumbed to selling for the fourth day amid a firmer yen on concerns about slowing US economic growth and growing doubts about the pace of future rate increases at the Federal Reserve. Gains were capped across the region before the release of US employment data that was reported after markets here had closed for the week.

The Shanghai Composite gave up early gains to end 0.6 percent lower before the weeklong Lunar New Year holidays starting February 8. The Hang Seng added 0.5 percent. On the week, the Shanghai Composite added 1.0 percent while the Hang Seng retreated 2.0 percent. Trading will resume in Hong Kong on Thursday.

Japanese shares extended losses for the fourth day as a stronger yen hit exporters. The Nikkei was 1.3 percent lower on the day and declined 4.0 percent on the week. Mitsui Fudosan and Mitsubishi UFJ Financial tumbled. Exporters fell sharply for a second day. Among those that were lower were Honda Motor, Toyota and Mazda. Toshiba plummeted after widening its loss forecast for the fiscal year ending in March. Energy explorer Inpex Corp and JX Holdings gained. Sharp soared after saying it has narrowed the candidates to two companies, Innovation Network Corporation of Japan and Hon Hai Precision Industry to proceed with takeover talks.

Australian shares ended off their day's lows as miners rebounded and the Reserve Bank of Australia's February monetary policy statement suggested there is scope for further monetary easing. The S&P/ASX and All Ordinaries closed down 0.1 percent. The S&P/ASX was down 0.5 percent on the week while the All Ordinaries lost 0.6 percent. December retail sales were flat missing forecasts of a 0.4 percent monthly increase.

The Kospi edged up 0.1 percent on the day and 0.3 percent for the week. The Sensex added 1.1 percent Friday but retreated 1.0 percent on the week.

Global Stock Markets