Italian vote weighs on markets despite upbeat US jobs data

LONDON – More solid U.S. jobs data on Friday did little to alter the cautious mood in global stock markets as investors braced for Italy’s referendum on constitutional reform over the weekend and as the oil price’s rally fizzled.

KEEPING SCORE: In Europe, Germany’s DAX was down 0.7 per cent at 10,469 while the CAC-40 in France fell 1.1 per cent to 4,511. The FTSE 100 index of leading British shares was 0.7 per cent lower at 6,707. U.S. stock markets were poised for modest losses at the opening bell, with Dow futures and the broader S&P 500 futures down 0.2 per cent each.

US JOBS DATA: U.S. employers added a solid 178,000 jobs in November, nearly matching the average monthly gains this year. The unemployment rate also fell to a nine-year low of 4.9 per cent. The figures have cemented market expectations that the Federal Reserve will raise interest rates again this month. The main question now is whether the Fed will indicate that interest rates will rise faster than anticipated next year.

ANALYST TAKE: “These figures continue to add weight to the argument to raise interest rates at the nearest possible opportunity,” said Paul Sirani, chief market analyst at Xtrade.

REFERENDUM RISK: Italians head to the polls Sunday to vote on measures that Premier Matteo Renzi says will make the country more competitive. Renzi has promised to resign if voters choose “no.” Market watchers say a rejection of the plan would raise uncertainty about Italy’s government and banks. Italy’s FTSE MIB index was down 1 per cent Friday, but is still well up on the week.

INSIGHT: “Investors have been loath to ignore the lessons taken from other elections this year and are steering clear of European stocks and the euro before the Italian referendum,” said Jasper Lawler at CMC Markets.

ENERGY: Oil snapped its rally after hitting its highest level since mid-October following a production cut agreement from the Organization of the Petroleum Exporting Countries. Benchmark U.S. crude lost 26 cents to $50.80 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the standard for pricing international oils, shed 44 cents to $53.50 a barrel in London. “Crude seems to be trying to move to a new trading range each side of $55 a barrel,” said Jeffrey Halley, a senior market analyst at OANDA.

ASIAN SCORECARD: Japan’s Nikkei 225 index shed 0.5 per cent to close at 18,426.08 and South Korea’s Kospi lost 0.7 per cent to 1,970.61. Hong Kong’s Hang Seng retreated 1.4 per cent to 22,564.82 and the Shanghai Composite Index was 0.9 per cent lower at 3,243.84. Australia’s S&P/ASX 200 fell 1 per cent to 5,444.00.

CURRENCIES: The euro fell 0.3 per cent to $1.0629 while the dollar was flat at 114 yen.