WITH EUROPEAN markets closed for the Easter bank holiday, as well as some markets in Asia – including Australia and Hong Kong – the US market served as the barometer for market sentiment yesterday.
US equities were down sharply and oil prices fell, as investors reacted to the surprisingly sharp slowdown in US jobs growth reported last week, figures which raised concerns about the strength of the world’s largest economy.
On the back of the worst week of 2012 for the Standard Poor’s 500 Index after employers added fewer jobs than forecast in March, stocks were down across the board.
Equity markets had been shut on Friday, when the much-awaited employment report was released. It showed that US payrolls rose far less than had been expected.
The US Labor Department said employers added 120,000 jobs, the fewest in five months, and below estimates. The amount had exceeded 200,000 for three consecutive months.
Financial shares led the decline yesterday, falling 2.1 per cent, representing the biggest drop out of the main SP500 groups.
Bank of America and JPMorgan Chase eased more than 2 per cent going into afternoon trading.
Only five companies in the benchmark index had advanced by lunchtime. AOL soared 43 per cent, the most since November 2009, after agreeing to sell and license patents to Microsoft.
The Internet company, under shareholder pressure to make strategic changes as revenue declines, agreed to sell and license more than 800 patents to Microsoft in a deal worth $1.06 billion. Microsoft stock fell 0.9 per cent to $32.23 at lunchtime.
ATT also saw significant activity after the company said it would sell a 53 per cent stake in its declining Yellow Pages business to private equity firm Cerberus Capital Management in a deal worth $950 million, including debt, allowing ATT to focus on its core telephone business.
Caterpillar and General Electric sank more than 2.1 per cent, pacing losses among industrial companies.
Aluminium company Alcoa, which is scheduled to report first-quarter earnings after the close of trading today, was down slightly.
The Dow Jones Industrial Average dropped 147.66 points, or 1.1 per cent, to 12,912.48 in early afternoon trading.
Equities had already slumped last week after the Federal Reserve signalled it will refrain from further monetary stimulus and concern about Europe intensified.
The Dow Jones Transportation Average of airlines, trucking companies and shipping stocks lost 1.9 per cent, the most since March 22nd.
Earlier yesterday, Asian stocks fell for a fourth day, the longest losing streak on the regional benchmark since November, amid concerns about the US economy and figures which showed that Chinese inflation accelerated. Toyota fell 2.4 per cent in Tokyo.
China Vanke led mainland developers lower after faster-than-estimated inflation damped bets policy makers will cut lending curbs.
HTC tumbled 6.8 per cent in Taiwan. Asias second-largest smartphone maker had on Friday posted its biggest drop in profit since listing a decade ago after sales declined amid competition from Apple and Samsung.
Volume on Japans Nikkei 225 Stock Average was 30 per cent below the 30-day intraday average, as markets were shut for holidays in Hong Kong, Australia, New Zealand, Thailand and the Philippines.
Meanwhile, oil prices fell more than $1 a barrel yesterday after Iran agreed to resume talks over its nuclear program, easing fears of a supply disruption in the Middle East.
Prices were also under pressure on concerns about the pace of the US economic recovery.
The dollar dropped to a one-month low against the yen, weighed by the slowdown in US jobs growth, which bolstered views the Fed could yet ease policy further to boost the economy.
The euro was down 0.18 per cent at $1.3071 at lunchtime.
Spot gold prices fell 83 cents, or 0.1 per cent, to $1637.10 an ounce. - Reuters/Bloomberg
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