New York (AFP) – World stocks got only a short-lived boost Friday after China removed ill-fated trading curbs and the US reported strong job growth, with gains vanishing as oil prices resumed their decline.
Gains early in the session in both Europe and New York soon fell away and equity markets in Paris, Frankfurt and New York all lost at least one percent for the day.
“There’s more good news than bad news today,” said Art Hogan, chief market strategist at Wunderlich Securities.
But Hogan pointed to worries over another decline in oil prices, which dropped again Friday, leaving black gold down about 10 percent for the week.
Hogan said investors were also cautious ahead of the weekend due to myriad uncertainties, including the Chinese economic outlook and a worsening diplomatic rift between Saudi Arabia and Iran.
“You’ve got plenty of things to contemplate heading into the weekend,” he said. “It’s not an environment that would manifest a lot of long investing.”
London’s FTSE-100 lost 5.3 percent over the week, Paris’s CAC 40 6.5 percent and the DAX 30 in Frankfurt dropped 8.3 percent.
In the US, both the Dow Jones Industrial Average and S&P 500 lost about 6.0 percent, marking the worst opening week of a year in the history of either index.
– China questions linger –
Earlier, the benchmark Shanghai index rose 2.0 percent after China removed the much-criticized “circuit breaker” mechanism blamed for fueling sharp sell-offs even as it halted trade early on mainland markets twice this week.
Authorities also set the central rate for the yuan currency marginally higher against the US dollar, ending eight days of falls. A decision to set it at a five-year low was one of the catalysts for hefty selling globally Thursday.
“There’s not a lot of stability in terms of policy management in China,” said Matthew Sherwood, head of investment strategy at asset managers Perpetual in Sydney.
“They are very much making it up as they go… It causes large market volatility as people in markets don’t like uncertainty.”
In the US, the Labor Department said Friday that employers added 292,000 new jobs in December, a year-end surge that was far better than expected. The report showed only tepid improvement in wages but most analysts were heartened by the data.
“Today’s job numbers should be soothing to the FOMC, to markets, and to workers, and stand in sharp contrast to the negative economic news emanating from China,” said Beth Ann Bovino, chief US economist at Standard & Poor’s Ratings Services.
“Markets are desperate for good news, and now have it, but it comes with a caveat because better employment growth means the Fed will raise rates faster…. People are finding jobs and getting paid more for them.”
– Key figures around 2200 GMT –
New York – Dow: DOWN 1.0 percent at 16,346.45 (close)
New York – S&P 500: DOWN 1.1 percent at 1,922.03 (close)
New York – Nasdaq: DOWN 1.0 percent at 4,643.63 (close)
London – FTSE 100: DOWN 0.7 percent at 5,912.44 points (close)
Frankfurt – DAX 30: DOWN 1.3 percent at 9,849.34 (close)
Paris – CAC 40: DOWN 1.6 percent at 4,333.76 (close)
EURO STOXX 50: DOWN 1.7 percent at 3,033.47 (close)
Shanghai – Composite: UP 2.0 percent at 3,186.41 (close)
Tokyo – Nikkei 225: DOWN 0.4 percent at 17,697.96 (close)
Euro/dollar: DOWN at $1.0922 from $1.0928 late Thursday
Dollar/yen: DOWN at 117.26 yen from 117.65 yen