European Stocks Extend Downturn After US Jobs Data

European equities sank further Friday after US jobs data, although missing forecasts, seeemed to strengthen the case for rapidly rising US interest rates, analysts said.

London, (APP - UrduPoint / Pakistan Point News - 5th Oct, 2018 ) :European equities sank further Friday after US jobs data, although missing forecasts, seeemed to strengthen the case for rapidly rising US interest rates, analysts said.

Wall Street meanwhile opened steady, buoyed by confirmation via the jobs market that the American economy is firing on all cylinders, they added.

The US non-farm payroll for September came in at 134,000 new jobs, far fewer than analysts had expected, but August figures were revised up, making this "far from a terrible employment number", said Craig Erlam, an analyst at Oanda.

"This is actually another very good report that other countries will be extremely envious of," he said.

- 'Gradual normalization' - The numbers, added Harm Bandholz at UniCredit, "allow the Federal Reserve to continue its policy of gradual normalization".

But as expectations of higher Fed rates increased, so did US Treasury bond yields, in turn weighing on stock markets because of expectations of higher borrowing costs.

With Treasuries the key gauge for Federal Reserve policymakers when deciding interest rate hikes, markets are growing more concerned that the cost of borrowing will rise more than previously expected and hit the economy.

"Equities are under pressure as investors fear the Fed will need to tighten policy faster than expected to keep the US economy from overheating," noted City Index analyst Fiona Cincotta.

- Denmark's Danske in dumps - "The overriding concern is that higher US interest rates will dampen growth, and this is what is causing the selloff in equities," she explained.

This week also saw Fed chief Jerome Powell deliver a hawkish assessment of rates, which added fuel to the fire for many who are predicting a quick pace of hikes.

Shares in Danske Bank tumbled by more then ten percent at one point in Copenhagen however, a day after the lender revealed it was being investigated by the US Department of Justice over possible money laundering related to more than $200 billion ($235 billion) transferred through the Danish lender's Estonian branch.

Denmark's largest bank is at the centre of a reputational maelstrom and several probes after it said "a large part" of the transactions between 2007 and 2015 were "suspicious".

In a fresh twist on Friday, the Financial Times reported that Danske executed up to 8.5 billion Euros of controversial "mirror trades" for Russian customers in a single year, according to an internal memo obtained by the newspaper.

- Bad week 'understatement' - Since the start of the year, shares in Danske Bank have lost around 40 percent of their value.

"The weekend cannot come quick enough for Danske. To say it's been a bad week for the bank would be an understatement," City's Cincotta said.

"It would take a brave trader to buy into this right now." Back in London, Unilever shares dipped after the Anglo-Dutch consumer giant axed post-Brexit plans to switch its London headquarters to Rotterdam following a shareholder revolt.

- Key figures around 1355 GMT -