European stocks edged higher on Thursday while Wall Street futures slipped after a flurry of weaker than expected jobs data heightened investor concerns about a looming US recession.
Europe’s region-wide Stoxx 600 added 0.2 per cent in early trading. Germany’s Dax was steady as industrial production in the eurozone’s biggest economy advanced 2 per cent month on month in February following a revised 3.7 per cent jump in January, well above the 0.1 per cent increase forecast by economists. London’s FTSE 100 gained 0.3 per cent.
In the US, contracts tracking the benchmark S&P 500 and the tech-heavy Nasdaq 100 both fell less than 0.1 per cent ahead of the New York open. Both indices had fallen on Wednesday.
The moves in equities come as traders turn their attention from the state of the banking sector to the health of the hitherto resilient US labour market, with investors interpreting slowing demand for jobs as a sign of cooling economic activity.
On Wednesday, a report from payroll processor ADP showed private businesses in the US created 145,000 jobs in March, below forecasts of 200,000. The day before, US Bureau of Labor Statistics data showed job openings fell sharply from 10.6mn in January to 9.9mn in February, the lowest monthly figure since May 2021.
New applications for unemployment aid are meanwhile forecast to have increased to 200,000 in the week to April 1, with flagship non-farm payrolls numbers out on Friday expected to decline to 240,000 in March from 311,000 in February.
US government debt rallied on Wednesday as investors ramped up their bets that the Federal Reserve’s aggressive monetary tightening campaign is nearing an end, pushing Treasury yields to their lowest level in seven months. The rally continued on Thursday, with the yield on the interest rate-sensitive two-year Treasuries falling a further 0.03 percentage points to 3.73 per cent.
“The labour market is weakening so yields are coming down, but the chances of recession are going up. Bonds know exactly what to do, stocks aren’t sure”, said Mike Zigmont, head of trading at Harvest Volatility Management.
The dollar was flat against a basket of six other major currencies, having shed more than 3.5 per cent over the past month. Spot prices for gold — which are close to a 12-month high — fell 0.2 per cent to $2,015 per ounce.
Brent crude, the international benchmark, lost 0.5 per cent to trade at $84.54, leaving it on course to end a five-day winning streak triggered by Opec+ members’ decision to reduce production by more than 1mn barrels a day.
In Asia, Hong Kong’s Hang Seng index was steady, China’s CSI 300 fell 0.1 per cent and Japan’s Topix lost 0.9 per cent.