Footsie rebounds after jitters on Wall St at strong job figures

Stronger than expected US jobs data sent the FTSE tumbling yesterday on fears of plunges in the Dow. But the sell-off in Wall Street failed to materialise, and the FTSE rebounded strongly to close at 5142.9, up 60.6. Lea Paterson reports on a volatile day in the financial markets.

The US economy is going from strength to strength, according to employment data released yesterday. Non-farm payrolls leapt by 404,000 in November, the biggest one-month increase since February 1996, and almost double the number markets had anticipated.

The unexpectedly strong figures put traders on red alert in the early afternoon. The Dow was expected to plunge by 100 points at market opening, 2.30pm GMT. Nervous UK dealers began selling off shares prior to Wall Street's opening, sending the FTSE tumbling from 5,148.7 just before midday to 5,047.9 at 1.45pm.

But US dealers held their nerve, and shares in New York remained firm on speculation that the employment data would not persuade the US Federal Reserve to raise interest rates.

The strong US stock market prompted a rebound in the FTSE in late afternoon trade. The FTSE closed at 5142.9, 60.6 up on the day.

The US payrolls rise brought November's unemployment rate down by 0.1 per cent to 4.6 per cent, the lowest since October 1973. Experts had expected unemployment to rise to 4.8 percent,

Market jitters are likely to continue until the Fed decides US interest rates later this month. But many US dealers are expecting rates to remain on hold, at least for the time being. There is still evidence of deflation in US manufacturing, and increases in productivity are helping rein in US labour costs. Investors switching funds out of the bond market also helped push US equities higher yesterday, dealers said.

US interest rate watchers will be watching US retail sales data and producer price data, both scheduled for release next week,

``With calm markets elsewhere, [US] retail sales will be quite important in bringing back some focus to domestic markets and possibly some fear there may be a Fed move the following week," said Andrew Snowball, economist at Julius Baer Investments in London.

Figures out on Thursday are forecast to show US retail sales up 0.3 per cent in November after a fall of 0.2 percent in October. US producer price index data are scheduled for release on Friday.

UK economists will be keeping their eyes on UK retail prices data, due to be published on Tuesday. NatWest Markets are forecasting no change, leaving inflation running 3.7 per cent higher than at this time last year. "Prices in the high street should be held back by the strength of the pound and this should outweigh the negatives to leave inflation unchanged on all measures," said NatWest.

UK producer prices are scheduled for release on Monday. NatWest is forecasting a further wave of input price deflation. It said: "This should feed through to lower output price inflation, especially as UK manufacturers are feeling less bullish about prices and output."

Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
peopleMathematician John Nash inspired the film Beautiful Mind
News
Richard Blair is concerned the trenches are falling into disrepair
newsGeorge Orwell's son wants to save war site that inspired book
Life and Style
Audrey Hepburn with Hubert De Givenchy, whose well-cut black tuxedo is a 'timeless look'
fashionIt may be a paradox, but the industry loves it
Arts and Entertainment
The pair in their heyday in 1967
music
Life and Style
fashionFrom bathing dresses in the twenties to modern bikinis
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine