Global stocks mixed as US jobs data fuels hope of rate hike pause

The US economy added more jobs than expected in August but revisions to June and July indicate a slowdown in the job market (MARIO TAMA)
The US economy added more jobs than expected in August but revisions to June and July indicate a slowdown in the job market (MARIO TAMA)

Global stocks diverged Friday, with the latest jobs report in the United States helping to solidify expectations of a pause in US interest rate hikes.

An increase of 187,000 jobs in August was slightly larger than analysts expected, but the figures for the previous two months were revised significantly lower which, overall, indicated a slowdown in the job market.

Moreover, wage growth cooled. analyst Patrick O'Hare called it "a Goldilocks report as it pertains to the market's thinking that the Fed won't be raising rates again."

A separate survey showed the slump in US manufacturing activity continued for a 10th consecutive month in August amid ongoing softness in new orders.

Friday's reports followed a series of data showing signs that the world's top economy is cooling, easing pressure on the Federal Reserve to lift interest rates further to fight inflation.

"This would suggest we've probably seen the last of Fed rate hikes for this economic cycle, with the narrative now likely to shift to when we can expect the first rate cut," said market analyst Michael Hewson at CMC Markets.

Wall Street's main stock indices mostly advanced, with the Dow ending 0.3 percent higher and the S&P 500 up 0.2 percent.

- Frankfurt, Paris lower -

In Europe, both Frankfurt's DAX stock index and the CAC 40 in Paris closed lower.

"European automakers are acting as the largest drag with the DAX and CAC40 underperforming after UBS cut Volkswagen and Renault to sell, citing the impact of Chinese automakers when it comes to electric vehicles," said CMC Markets' Hewson.

Chinese automakers will have a major presence at the Munich car show opening next week, hoping to make serious inroads in the European auto market with their electric vehicles.

Investors were also assessing China's latest moves to help the country's battered property sector as authorities face growing calls to introduce a big-bang economic growth stimulus.

Chinese markets were lifted after the central bank cut the amount of foreign cash lenders must keep in reserve, in a bid to support the yuan.

Dealers also cheered the latest measures to help the property sector, which allow cities to cut down payments for home buyers and encourage lenders to lower rates on existing mortgages.

The moves follow a series of pledges in August to shore up the industry, which is being ravaged by a gargantuan debt crisis.

Among them are rate cuts, looser rules for mortgage applicants, tax rebates for people upgrading their homes and a cap on commissions.

But observers say traders were unlikely to drag markets out of their slumber unless the government unleashes the sort of $550 billion "bazooka" seen in 2008 during the global financial crisis.

Data on Thursday showed a massive plunge in sales in August, while developers are on the brink with major property firm Country Garden close to default.

Oil prices rose strongly, with the main US contract hitting $85 per barrel for the first time since November thanks to a weaker dollar and supply concerns.

- Key figures around 2050 GMT -

New York - Dow: UP 0.3 percent at 34,837.71 points (close)

New York - S&P 500: UP 0.2 percent at 4,515.77 (close)

New York - Nasdaq: FLAT at 14,031.81 (close)

London - FTSE 100: UP 0.3 percent at 7,464.54 (close)

Frankfurt - DAX: DOWN 0.7 percent at 15,840.34 (close)

Paris - CAC 40: DOWN 0.3 percent at 7,296.77 (close)

EURO STOXX 50: DOWN 0.3 percent at 4,282.64 (close)

Tokyo - Nikkei 225: UP 0.3 percent at 32,710.62 (close)

Shanghai - Composite: UP 0.4 percent at 3,133.25 (close)

Hong Kong - Hang Seng Index: Closed for typhoon

Euro/dollar: DOWN at $1.0777 from $1.0844 Thursday

Pound/dollar: DOWN at $1.2590 from $1.2669

Dollar/yen: UP at 146.25 yen from 145.49 yen

Euro/pound: UP at 85.58 pence from 85.56 pence

Brent North Sea crude: UP 2.3 percent at $85.55 per barrel

West Texas Intermediate: UP 2.0 percent at $88.55 per barrel