Weak US jobs data boosts Wall Street, but inflation in Europe rises to 3.8%

The rise in European stock markets reported this morning now has a precise cause, arriving from across the Atlantic. According to the Associated Press, the US economy created around 29,000 jobs in September, compared with 133,000 in August: a sharp slowdown that has scaled back expectations of a new monetary tightening by the Federal Reserve.

Wall Street’s reaction was immediate. Over the week the S&P 500 gained 0.7%, the Dow Jones 0.5% and the Nasdaq 1.2%, moving closer to record highs. Ten-year Treasury yields, however, remain at elevated levels: they rose back to 5.28%, a sign that the bond market is not yet taking a shift in US monetary policy for granted.

In Europe, the effect of the US data was felt on the same indices already rising this morning, but alongside this boost there is now an element complicating the picture: inflation in the eurozone has risen to 3.8%. According to analysis by S&P Global cited by Il Messaggero, rising prices are no longer confined to fuel alone, an indication that broadens the scope of pressures on consumer prices and that the European Central Bank will have to take into account in its upcoming assessments on interest rates.

In terms of indices, the Stoxx Europe 600 closed the week up 0.75%, at 631.35 points. Among individual markets, Frankfurt led the gains with the Dax up 1.24%, followed by Paris with the Cac 40 at +0.79%. More contained increases were seen in Milan, where the Ftse Mib rose 0.49%, in Madrid with the Ibex 35 at +0.4% and in London, where the Ftse 100 stopped at +0.32%.

The picture emerging from recent hours thus shows two markets responding to the same impulse — the slowdown in American employment — with differing intensity and for partly diverging reasons: on Wall Street the data mainly fuels expectations of steady rates, while in Europe it adds to inflation that, according to the cited analysis, is widening its base beyond energy. Treasury yields at 5.28% remain the figure to watch in the coming days, as an indicator of how genuinely convinced the US bond market is that the monetary tightening has ended.