Falling US job figure dampens markets

Financial markets sagged yesterday following their sparkling performance on Wednesday. An unexpectedly big fall in initial jobless claims in the US combined with a reassessment about the arrival of a Japanese "wall of money" to drive down the US bond market, with the 30-year T-Bond reacting with a drop of over a point.

The pound, which had risen sharply in the slipstream of the dollar, had a listless day as the dollar failed to rally further. The dollar was trading at 90.45 against the yen at the London close, down from 90.85 on Wednesday.

Against the German mark, it was down almost a pfennig to DM1.39.

The plunge in the jobless claims for the last week in July came as a big surprise given that markets were expecting virtually no change. Instead they fell by by 51,000 to 321,000, the lowest since early February. The US Labor Department said the fall was the biggest for a year.

Ahead of today's employment report, the figures fuelled fears that the Fed's cut in interest rates last month will not be followed up with a further easing of policy for some time to come. The market is looking for an increase in the non-farm payroll of about 125,000.

Sentiment was not helped by a reappraisal of the prospects for big outflows of capital from Japan following Wednesday's package of measures. Analysts pointed out that Japanese institutional investors were still risk-averse following the huge currency losses they have incurred in recent years on foreign investments.

According to Mark Cliffe, international economist at HSBC Markets, "there was a much more sceptical tone in the market" about the arrival of the so-called wall of money.

In Europe, the French franc remained firm against the mark despite a bigger-than-expected cut by the Bank of France in its ceiling rate of interest.

The Bank cut the five-to-10- day lending rate from 7 to 6.50 per cent, bringing it back close to its level in early March when the bank raised it to 8 per cent to defend the franc.

Although the cut was bigger than expected - the bank last brought the rate down by 25 basis points - the franc strengthened slightly to close at 3.443.

The need for further easing of monetary policy was emphasised by the latest French unemployment figures which fell in June by 16,700 to 3,234,000.

On the new headline measure, which excludes job-seekers who worked over 78 hours last month, unemployment fell below three million for the first time since early 1993.

peopleFrankie Boyle responds to referendum result in characteristically offensive style
Arts and Entertainment
Highs and lows of the cast's careers since 2004
New Articles
i100... with this review
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam