7th Apr 2014 12:24
LONDON (Alliance News) - US stocks look set to continue lower when Wall Street opens Monday, following the heavy falls seen on Friday after the release of the worse-than-expected non-farm payroll employment report.
The report showed that the US economy added 192,000 jobs last month. While a solid gain, the addition was slightly lower than the 200,000 that had been expected by economists. The January and February numbers were revised higher to 144,000 and 197,000 respectively, in a net upward revision of 37,000 jobs.
While the upward revisions are positive, it raises questions over the impact that the freezing winter weather actually had on job creation, in turn raising questions over whether the economy is about to start accelerating out of the freeze or not, analysts suggest.
UK stocks fell heavily on Friday, with the Nasdaq Composite losing a huge 2.6%. "Momentum stocks" such as Facebook led the falls amid concern that earnings do not support the high valuations that have led stock markets to fresh all-time highs in recent sessions. Facebook lost more than 10% last week, with Netflix also down 9%.
With little in the macroeconomic data calendar to shift sentiment, a similar picture has been seen in Europe Monday with the technology sector leading the declines. FTSE 100-listed ARM holdings, supplier to Apple in the US, is down 2.4%, while chip making peer Imagination Technologies leads the FTSE 250 fallers, down 4.7%.
"The market is sensitive to technology stocks because they tend to be high-beta, high risk stocks, which can act as a leading indicator for the broader market," says Forex.com research director Kathleen Brooks. "Thus, as technology stocks sell off some market participants are wondering if this could lead to a broader decline in risky assets," Brooks says.
The US corporate calendar is as quite as the UK's Monday, but the big US banks are due to start reporting first quarter earnings later in the week, with JP Morgan numbers due on Friday. Ahead of that investors appear to have little appetite for the riskier equities.
The futures markets indicate that US stocks will continue lower Monday, with the Nasdaq Composite set to open down 0.6%, and the S&P 500 and DJIA to each open down about 0.3%.
"US markets look set to open lower today after Friday?s US unemployment miss caused a sell-off in global markets," said CMC Markets analyst Jasper Lawler.
Rising background tensions in Ukraine are also weighing on investor sentiment Monday. Ukraine's Acting Prime Minister Arseniy Yatsenyuk said on Monday that the Kremlin was behind pro-Russian protesters who occupied key government buildings in the east at the weekend, adding that the tactic could be a preamble for a Russian military incursion. Pro-Russian activists continue to occupy official buildings in three cities bordering Russia and are reportedly calling for those parts of Ukraine to be annexed by Russia as Crimea has been.
In the UK, the FTSE 100 has slipped back to the lows of the session, down 0.8% at 6,643.04, the FTSE 250 is down 0.5% at 16,347.41, and the AIM All-Share is down 0.1% at 851.97.
In Europe, major markets are also lower, with the CAC40 down 0.8%, and the DAX down 1.4%.
In the absence of any key data drivers, the major currency pairs are fairly quiet. The euro is slightly higher over the session, currently trading at USD1.3730, while the pound is flat at USD1.6590.
There are no major releases left in the economic calendar Monday.
By Jon Darby; [email protected]; @jondarby100
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