After spending most of the session in the black, a turn lower on Wall Street dragged the UK index into the red for the close. Not even a weaker pound versus the dollar, after standout US jobs report was sufficient to keep the FTSE in positive territory for the close.
The Dow and S&P kicked off trading on Friday on the front foot as a thawing of trade tensions boosted demand for riskier assets. However, an impressive US jobs report stoking fears over higher borrowing costs and Apple’s disappointing forecasts brought equities tumbling lower.
Optimism grew on Friday that a further escalation in the US – Sino trade war could be avoided, following a positive tweet from Trump regarding the latest talks with China’s President Xi. The trade war and its impact on economic growth in China and globally has weighed heavily on the markets over recent weeks, pulling equities sharply lower. Following October’s selloff, any signs of progress in US-Sino relations quickly attracted bargain hunters, prepared to snap up equities at knock down levels.
US Jobs Smash Expectations
Whilst US stocks initially moved higher following the US jobs report they quickly reversed giving up earlier gains. However, the dollar’s reaction to the US jobs report was subdued at best. A tighter job market helped US wage growth accelerate to the highest level since 2009. 250,000 new jobs were created in October, smashing forecasts of 190,000. Unemployment remained at historical lows of 3.7%, whilst average hourly earnings increased 3.1% year on year in October.
Continued tightening of the US jobs market fuelled expectations of a rate rise by the Federal Reserve at the December policy meeting. Whilst this would usually send the dollar northwards. However, the dollar had rallied hard prior to the data, picking itself up from session lows of 95.99 to its current level of 96.40 versus a basket of currencies.
Apple Dives on Weaker Forecast
The Nasdaq was losing ground fast as was the S&P as investors reacted to Apple’s disappointing forecast for the crucial festive season and a future of less transparency. The tech giant announcing that it will no longer be announcing product unit sales only made investors all the more nervous.