Global stocks erase gains from previous day's rally after jobs data adds to case for Fed hike

SEOUL, South Korea – Global stock markets were weaker Thursday after a strong U.S. job ads report that added to the case for the Fed’s first rate hike in years.

KEEPING SCORE: Britain’s FTSE 100 slipped 0.9 per cent to 6,175.47. France’s CAC 40 fell 0.8 per cent to 4,628.83 while Germany’s DAX was down 0.6 per cent to 10,241.31. Futures augured a modest rebound for Wall Street. Dow futures and S&P futures both rose 0.3 per cent.

ANALYST’S TAKE: “Just when you thought risk sentiment is on the mend, it unceremoniously crumbles in the U.S. markets,” said Bernard Aw, a market strategist at IG. “This is going to deal a blow to Asia today. The risk-on mode is likely to give way to yet another cautious trading session or worse.”

FED WATCH: A report from the Labor Department on Wednesday showed that U.S. employers advertised the most jobs in the 15 years that the government has tracked the data. Job openings soared 8 per cent to 5.75 million in July, adding to evidence that hiring remains strong and may prompt the Federal Reserve to raise interest rates at its meeting next week for the first time since the 2008 financial crisis. Ultra-low interest rates have been a boon for stock markets for several years.

ASIA’S DAY: Asian markets shed some of the gains from the previous day’s rally. Japan’s Nikkei 225 sagged 2.5 per cent to 18,299.62 one day after surging 7.7 per cent in its biggest gain since October 2008. Hong Kong’s Hang Seng index dropped 2.6 per cent to 21,562.50 and China’s Shanghai Composite Index finished 1.4 per cent lower at 3,197.89. Stocks in Australia and Southeast Asia also were down but South Korea’s Kospi turned up 1.4 per cent to finish at 1,962.11. New Zealand stocks closed flat after the country’s central bank cut its benchmark interest rate by a quarter of a percentage point.

ENERGY: Benchmark U.S. crude bounced back, adding 71 cents to $44.89 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.79 to close at $44.15 a barrel on Wednesday in New York. Brent crude, a benchmark for international oils used by many U.S. refineries, gained 35 cents to $47.93 in London.

CURRENCIES: The U.S. dollar rose to 120.89 yen from 120.28 yen. The euro weakened to $1.1204 from $1.1219.