Business | Markets
Stocks, commodities fall in view of jobs report
Bigger than expected payroll slump in the US puts damper on recovery outlook.
- Bloomberg
- Published: 23:20 October 2, 2009
London: Stocks fell around the world for a second day, commodities dropped and the yen rose on speculation rising unemployment will damp the global economic recovery.
The MSCI World Index of 23 developed countries slid 0.9 per cent at 12.17pm in London, extending its second weekly decline. Futures on the Standard & Poor's 500 Index slipped 0.3 per cent, indicating the benchmark gauge for US equities may drop for a fourth day. Copper fell 1 per cent.
The yen climbed against all but one of the 16 most-traded currencies tracked by Bloomberg. The cost of insuring investment-grade corporate bonds against default increased for a third day.
A Labour Department report due yesterday was expected to reflect a 26-year high of 9.8 per cent in the US jobless rate.
The report was expected to show that payrolls fell by 175,000 workers in September, according to the median estimate of 81 economists surveyed by Bloomberg News. Goldman Sachs Group said yesterday that the American economy probably lost more jobs than it previously anticipated, citing "disappointing" data including the number of people receiving jobless benefits.
"Equity markets haven't made the best start to October and this week's run of weaker economic data gives enough reasons to doubt whether the scale of the rally in risk from March is justified," Kenneth Broux, an economist at Lloyds Banking Group in London, wrote in a note to clients.
Raw-material producers, banks and retailers led the third straight decline in Europe's Dow Jones Stoxx 600 Index, which slid 1.4 per cent. A 49 per cent increase since March 9 drove price-earnings valuations on the gauge last week to the highest since 2003, data compiled by Bloomberg show. Lonmin, the third-biggest platinum producer, retreated 4 per cent in London, while Xstrata, the world's fourth-largest copper supplier, slipped 4.6 per cent.
Commerzbank, Germany's second-biggest lender, slid 7.5 per cent in Frankfurt, while Natixis, the French bank whose two biggest shareholders agreed to merge, retreated 5.1 per cent in Paris.
The drop in US futures indicated the S&P 500 may extend its 1.4 per cent weekly decline. The index tumbled by the most in three months Thursday as a gauge of manufacturing unexpectedly fell and jobless claims grew more than forecast. The VIX, as the Chicago Board Options Exchange Volatility Index is known, surged 10 per cent to a one-month high of 28.27.
The jobs report was expected to reflect a payroll cut of 250,000 workers rather than the 200,000 Goldman Sachs had previously estimated, chief US economist Jan Hatzius said in a note to clients Thursday.
The MSCI Emerging Markets Index slid 1.3 per cent. Russia's Micex index tumbled 2.9 per cent, the steepest intraday drop since September 21.
Industrial metals slid in London for a second day. Copper, heading for a fifth straight weekly decline, dropped to $5,925 a metric tonne on the London Metals Exchange. Lead, used mainly in car batteries, fell as much as 4.1 per cent to $2,100 a tonne. Crude oil futures slid as much as 1.6 per cent to $69.69 a barrel in New York.
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