Wall Street stock futures fell sharply on Friday and the dollar strengthened after hotter than expected US jobs numbers added to pressure on the Federal Reserve to maintain its tough stance on inflation.
Contracts tracking Wall Street’s benchmark S&P 500 fell 1.4 per cent ahead of the New York open while those tracking the tech-heavy Nasdaq 100 tumbled 2.1 per cent.
US non-farm employment increased by 263,000 last month, far higher than the 200,000 rise forecast by economists polled by Reuters. The previous month’s increase was also revised higher to 284,000, from 261,000 initially reported. The unemployment rate was unchanged at 3.7 per cent.
Better news for American workers is bad news for markets, however. “The pace of US hiring alongside other measures of labour market activity such as vacancies and wage growth remain too high for the Fed’s liking,” said Hussain Mehdi, strategist at HSBC Asset Management.
“With this in mind and amid broader US economic resilience and sticky core inflation, we think speculation of a Fed pause as soon as the January-February meeting is unjustified,” Mehdi added.
A measure of the dollar against six other major currencies leapt 0.7 per cent as traders reversed some of their bets that the Fed will slow its interest rate rises when it meets later this month, potentially easing an aggressive monetary tightening campaign that has sent shockwaves through global markets this year.