Friday October 5th

5-10-2018

Stock futures fall as rates pop on jobs report

U.S. stock-index futures fell on Friday after the release of mixed employment data jolted interest rates higher. Around 8:40 a.m. ET, Dow Jones Industrial Average futures fell 45 points, indicating a loss of 34.48 points at the open. S&P 500 and Nasdaq 100 futures were also trading lower. The U.S. economy added 134,000 jobs in September, well below the expected gain of 185,000. However, the U.S. unemployment rate fell to its lowest level since 1969. Job gains for August also received a sharp upward revision to an addition of 270,000 jobs from 201,000. Wages, meanwhile, grew by 2.8 percent last month on a year-over-year basis to match expectations. The solid growth in wages lifted interest rates. The 10-year note yield rose to 3.227 percent and hit a fresh 2011 high while the two-year note yield advanced to 2.897 percent. Yields have bee on the rise this week amid strong economic data. Comments from Federal Reserve Chair Jerome Powell also pushed yields higher. Powell on Wednesday said that the Fed had a long way to go before interest rates would hit neutral, suggesting to markets that more hikes could be coming. Asia markets saw broad declines on the final trading day of the week, following a tumble overnight on Wall Street. The Nikkei 225 was down by 0.8 percent to close at 23,783.72, while the Topix index slipped by 0.47 percent to 1,792.65. In South Korea, the Kospi slid 0.31 percent to close at 2,267.52. Meanwhile, Hong Kong's Hang Seng index slid by 0.19 percent to close at 26,572.57. China's markets were closed for the Golden Week holiday. Oil prices steadied just below four-year highs on Friday as U.S. sanctions curbed Iran's exports, tightening global crude supply. International benchmark Brent crude oil futures was down 5 cents a barrel at $84.53 by 8:29 a.m. ET (1229 GMT). On Thursday, Brent fell by $1.34 a barrel or 1.6 percent, but the contract remained on course for a gain of around 2 percent for the week. U.S. West Texas Intermediate (WTI) crude futures was up 22 cents at $74.55, a gain of nearly 2 percent since last Friday. Gold prices rose on Friday following a monthly U.S. employment report falling to its lowest level in a year. Spot gold rose 0.3 percent at $1,202.40 an ounce. It had gained 0.6 percent so far for the week, on track to mark its biggest weekly gain in six. U.S. gold futures were up 0.3 percent at $1,205.70 an ounce.