European stock markets muted as US jobs miss forecast

·3 min read
 A Now Hiring sign hangs near the entrance to a Winn-Dixie Supermarket in Hallandale, Florida
It was the second missed forecast in a row, casting doubts over the labour market's recovery. Photo: Getty Images

Stocks in Europe closed mixed on Friday after a retreat in gas prices, and disappointing US jobs data.

In London, the FTSE 100 (^FTSE) ended more than 0.2% higher on the day, propped up by a falling pound, while the French CAC (^FCHI) was 0.5% lower and the DAX (^GDAXI) was 0.2% down in Germany.

It came as the US economy added just 194,000 jobs in September, far fewer than the 500,000 expected. It was the second missed forecast in a row, casting doubts over the labour market's recovery.

Nonfarm payrolls increased 194,000 last month after an upwardly revised 366,000 gain in August, the Labour Department report showed.

However, the jobless rate fell from 5.2% to 4.8%, while average hourly earnings jumped.

Richard Flynn, managing director at Charles Schwab UK, said: "Investors will be disappointed by today’s data, particularly as there has been much more positive economic data issued recently: from key September manufacturing reports showing stronger-than-expected growth to, personal income and spending rising in August, and September consumer sentiment unexpectedly being revised higher.

"However, as the implication of economies reopening are felt across the world, inflation is a key metric that investors are tracking."

Read more: Economy adds back disappointing 194,000 jobs, unemployment rate falls to 4.8%

The muted mood also follows a decline in European natural gas prices, with the benchmark future down 10.73% to post its biggest daily loss since August. However, prices are still up almost five-fold since the start of the year.

“There has been a relief rally in the UK, as energy prices have steadied and as investors have been tempted back on valuation grounds following a difficult few trading sessions which has depressed share prices,” Richard Hunter, head of markets at Interactive Investor.

“Some sterling weakness is also propping up the FTSE 100 given its majority exposure to overseas earnings, while the more domestically focused FTSE 250 has also recouped some losses following some buying on the dip from investors still keen on the UK economic recovery story.”

Read more: Energy price cap rethink sparks fears of higher bills

Across the pond, the S&P 500 (^GSPC) rose 0.1% while the tech-heavy Nasdaq (^IXIC) fell 0.1% after a positive start. The Dow Jones (^DJI) pushed 0.1% higher at the time of the European close.

On Thursday night, the US Senate voted to stave off a credit default that would have sparked a recession as Democrats and Republicans agreed to a stop-gap fix to raise the nation's debt limit.

Watch: United States steps back from debt cliff... for now

The move defers the crisis until 3 December by adding another $480bn (£352bn) to the allowable national debt. It came with an estimated 11 days to go until the country would no longer have been able to borrow money or pay off loans for the first time in its history.

Asian shares rose overnight, taking their lead from the tech rally on Wall Street. Chinese shares returned from a one-week holiday on an upbeat note after a key survey showed that the country’s service sector returned to growth last month.

In Japan, the Nikkei (^N225) climbed 1.3% after rallying in the previous session, while Hang Seng (^HSI) rose 0.3% and the Shanghai Composite (000001.SS) was 0.7% higher.

Elsewhere, Australian shares rose on the day thanks to a boost in mining stocks amid surging commodities prices.

Watch: What are SPACs?

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