European stocks edged lower in early trade, in the aftermath of US employment data that appeared to show that the labour market in the world’s biggest economy was cooling.
The region-wide Stoxx 600 fell 0.2 per cent, while Germany’s Dax lost 0.2 per cent and France’s Cac 40 slipped 0.1 per cent. London’s FTSE 100 rose 0.1 per cent.
Data on Tuesday from the US Bureau of Labor Statistics showed job openings fell from 10.6mn in January to 9.9mn in February, the lowest monthly figure since May 2021 and below economists’ expectations. Lay-offs and voluntary departures, considered more reliable figures than the volatile openings number, fell by 215,000 to 1.5mn and 146,000 to 4mn respectively.
“The release added to the signs that the Fed’s tightening cycle was increasingly having an effect, and the historic levels of tightness in the labour market were finally beginning to ease,” said analysts at Deutsche Bank.
Analysts are looking to the release of non-farm payrolls and the unemployment rate on Friday to provide further clarity. Investors are now betting that the US Federal Reserve will not raise interest rates at its next meeting in May.
Futures contracts linked to the blue-chip S&P 500 and the tech-heavy Nasdaq tipped the indices to trade flat at Wednesday’s open.
Yesterday the KBW bank index, which tracks 22 US banks, lost 2 per cent after JPMorgan chief executive Jamie Dimon warned that the crisis was “not yet over” and its effects would be felt for “years to come”. The Stoxx 600 Banks index lost 0.5 per cent.
“So far the contagion has been contained but I think we lack perspective on the broader ramifications of the end of easy money and higher interest rates,” said Emmanuel Cau, head of European equity strategy at Barclays. “There may be pockets of instability.”
In Asia, the Hang Seng index fell 0.7 per cent, while China’s CSI 300 gained 0.3 per cent.
Treasury prices slowed, with the yield on 2-year Treasury notes rising 0.04 percentage points to 3.87 per cent, and the yield on 10-year notes gaining 0.02 percentage points to 3.35 per cent. On Tuesday, the yield on 10-year notes fell to 3.34, the lowest level since September. Two-year German Bund yields were up 0.01 percentage points to 2.64 per cent, and 10-year contracts rose 0.01 percentage points to 2.28 per cent.
The dollar index, which measures the greenback against a basket of six peer currencies, rose 0.1 per cent.
Oil prices continued to climb with Brent crude up 0.4 per cent to $85.24 a barrel and WTI up 0.3 per cent to $80.96 a barrel. Gold rose 0.3 per cent to 2,027.99, its highest level since March 2022.
