US Jobs and Renewed Debt Fears Hit Markets
A disappointing US jobs report coupled with fresh fears about European sovereign debt dragged markets lower on Friday
The FTSE 100 index shed 85.2 points or 1.6% to 5,126.0, while the FTSE 250 index dropped 201.3 points or 2.1% to 9,599.9.
Across the pond, although nonfarm payrolls increased by 431,000 in May—the largest gain since March 2000—they were still below economists' predictions for an increase of 515,000. Much of the May figure was lifted by the 411,000 temporary workers hired for the 2010 US Census. Only 41,000 private-sector jobs were added, a sharp drop from the 218,000 jobs added in April. In turn, the unemployment rate declined only to 9.7% in May, compared with 9.9% in April.
Meanwhile, G20 finance ministers have congregated in South Korea to address global economic concerns with the intention of restoring confidence in the financial markets. However, differing views on the Basel III proposals, set to be complete in November, have forced some countries to call for the delay of the reforms' implementation.
Adding to global economic concerns, comments from a Hungarian government spokesperson implying their economy is fast on Greece’s heels also upset investor sentiment.
All things considered, it’s of little surprise that only six of the FTSE 100 companies managed to close above breakeven on Friday, though overall the index is 1.25% firmer on the week.
Unusually for the stock of late, BP was one of the few blue-chip gainers, up 0.3% after it began collecting around 1,000 barrels of oil per day from its leaking well in the Gulf of Mexico.
On the flipside, Royal Bank of Scotland, Barclays and Standard Chartered led the banking sector lower, down 5.5%, 4.7% and 3.8%, respectively, hurt by vague rumours surrounding Societe Generale’s derivatives operations.
Miners were also under the cosh given the renewed concerns about global economic growth, with Vedanta Resources, Kazakhmys and Eurasian Natural Resources each losing between 4.4% and 5.2%.
