North American markets are headed for a rough start after the U.S. jobs report came in much weaker than expected, with triple-digit losses likely in the major U.S. and Canadian indexes.
Economically sensitive commodities, including crude oil and copper, also dove on the soft jobs report -- and gold rallied as traders ran to the haven asset for cover.
The Canadian jobs report, issued at the same time, was also surprisingly weak, sending the loonie into a tailspin. It lost nearly a full cent on this morning's economic data.
The U.S. created just 88,000 jobs in March, far from the 180,000 that economists had forecast, although the unemployment rate dipped to 7.6 per cent. It was the smallest gain in jobs in nine months, and more people dropped out of the labour force. It was the most significant evidence to date that the rate of hiring in the U.S. is slowing, and suggested austerity measures in the U.S. - especially the sequester-related spending cuts - could be taking their toll.
Some economists have been scaling back their forecasts for March job growth in recent days, but even many of the more pessimistic were expecting a better reading.
In Europe this morning, traders have another concern: Retail sales for the euro zone fell 0.3 per cent in February from the previous month. Airline stocks took a particularly harsh beating, as investors worried that an outbreak of bird flu in China could cut into travel demand. A new strain of the bird flu has so far caused six deaths.
In Asia overnight, the Nikkei surged to a 4.5-year high, extending gains from Thursday after the Bank of Japan unleashed $1.4-trillion in stimulus. Other indexes, especially the Hang Seng, ended lower, as traders cut their equity exposure ahead of this morning's U.S. jobs report.
Now, here's a closer look at what is going on this morning.
MARKETS:
Equities:
U.S. futures: S&P 500 -1.0 per cent; Dow -0.9 per cent; Nasdaq -1.0 per cent
Hong Kong's Hang Seng index -2.73 per cent
Shanghai composite index -0.12 per cent
Japan's Nikkei +1.58 per cent
London's FTSE 100 -1.26 per cent
Germany's DAX -1.59 per cent
France's CAC 40 -1.43 per cent
Italy's FTSE MIB +0.22 per cent
Commodities:
WTI (Nymex May) -1.27 per cent at $92.08 (U.S.) a barrel
Gold (Comex Jun) +1.15 per cent at $1,570.20 (U.S.) an ounce
Copper (Comex May) -0.54 per cent at $3.33 (U.S.) a pound
Currencies:
Canadian dollar down 0.0086, or 0.87 per cent, at $0.9789 (U.S.)
ECONOMIC INDICATORS TO WATCH:
The U.S. Labour Department said nonfarm payrolls rose 88,000 last month, versus the 190,000 that was expected.
The U.S. Commerce Department said the nation's trade deficit narrowed 3.4 per cent in February to $43.0-billion from $44.5-billion in January. Economists expected the deficit to widen to $45.0-billion. Crude oil imports fell to their lowest level since March 1996.
Statistics Canada said the country lost 55,000 jobs in March, as the jobless rate climbed back to 7.2 per cent.
Statscan said the merchandise trade deficit in February widened to $1-billion. Economists expected no change.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
It was bound to happen sooner or later: a U.S. dividend-focused fund with a shorting hedge is on its way.
Why you shouldn't hold much cash in your portfolio.
Four companies whose stock repurchases - and strong dividend yields - serve investors well.
Gold consultancy GFMS is sticking to its bullish views, forecasting bullion to reach the mid-1,800s per ounce by the end of this year.
Rail traffic isn't looking recessionary, but it's definitely weakening.
Bullish sentiment among individual investors is on the decline.
The policy measures taken in Japan to revive economic growth are "quite dangerous," warns billionaire investor George Soros.
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The premarket report is constantly updated to reflect the latest news developments and market moves. For instant headlines on breaking economic and corporate news in the premarket, follow Darcy Keith on Twitter at @eyeonequities
Darcy Keith