European stocks closed in the red on Friday as traders continue to digest the outlook for the global economy following a warmer-than-expected U.S. non-farm payrolls report.
In London, the FTSE 100 (^FTSE) fell 0.2% at the close, a day after Fitch joined other credit rating agencies forecasting a bleak outlook for the economy by downgrading the credit outlook for UK public debt from “negative” to “stable”. .
The CAC 40 (^FCHI) was down 1.1% in Paris and Frankfurt, the DAX (^GDAXI) slipped 1.4% on the day.
Read more: British pound slides against dollar as US jobs data fuel rate rises best
“Concerns are rife on all fronts following the latest robust snapshot in the US labor market,” said Susannah Streeter, senior investment and market analyst, Hargreaves Lansdown.
“Investors simultaneously worry that the falling pace of hiring signals a slowing economy, but also that the better-than-expected data shows job markets haven’t slowed enough to keep the Fed from raising rates. aggressively.”
Meanwhile. Britain’s higher borrowing costs appear to have had an impact on the property market after Halifax said average house prices fell 0.1% in September. Annual growth fell to 9.9% from 11.4% in August.
It comes as the Bank of England (BoE) said its £65bn ($73bn) intervention in the gilt market last week had saved the UK from being on the brink of a financial crisis.
A letter from Sir Jon Cunliffe, Deputy Governor of the BoE, stressed that there were fears of “serious disruption in key funding markets and widespread financial instability as a result”.
Cunliffe added that pension funds would have been forced to dump £50bn of government bonds into a chaotic market.
Read more: Bank of England says £65billion intervention prevented financial crisis
Across the Atlantic, Wall Street indices lost steam, opening lower on Friday after the latest jobs data intensified recession fears and bets on higher interest rates for longer.
The benchmark S&P 500 (^GSPC) lost 2%, the tech-heavy Nasdaq (^IXIC) fell 2.8%, while the Dow Jones (^DJI) fell 1.4 % at the London close.
Nonfarm payrolls increased by 263,000 in September, against a consensus estimate of around 250,000, while in August hiring increased by 315,000.
The jobless rate came in at 3.5%, down from 3.7%, showing how resilient the labor market is still to rising rates.
“September’s gain of 263,000 nonfarm payrolls is another signal that labor market conditions are cooling,” said Andrew Hunter, senior U.S. economist at Capital Economics. “But with the jobless rate back to 3.5%, the report is unlikely to significantly change the Fed’s view that the labor market is out of balance.”
Asian markets closed lower overnight as a global rally petered out.
The Hang Seng (^HSI) led the losses, closing down 1.3% in Hong Kong and the Nikkei (^N225) fell 0.7% in Tokyo. The Shanghai Composite (000001.SS) remained closed due to a public holiday.