Stocks retreat on US jobs, oil drops on Ukraine hopes

AFP | London

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Stock markets fell yesterday as investors data showed the US jobless rate hit its highest level since 2021, while oil prices slumped on renewed hopes for an end to Russia's war in Ukraine.

Data showed that in November the US unemployment climbed to 4.6%, its highest level in four years.

The report, delayed by a lengthy government shutdown, also indicated that the US economy lost 105,000 jobs in October.

Hiring picked up again in November to 64,000, but this was still a slower pace than before.

"Today's US data releases were overall weaker than expected, although not as bad as some had feared either," said Forex.com analyst Fawad Razaqzada.

"The market was pricing in just shy of 50% chance of a March cut before the jobs report, but in the immediate aftermath of the report that was up to around 60%.

While poor data boosting the chance of interest rate cuts by the US Federal Reserve can often prop up stocks, Wall Street's main indices opened the day lower.

Meanwhile, international oil benchmark Brent dropped below $60 per barrel for the first time since May, while the main US crude contract WTI also declined.

A deal to end the war in Ukraine could ease sanctions on Russian oil, adding to oversupply concerns already weighing on the market.

US President Donald Trump said Monday that a deal to end the war was closer than ever, after Washington said it offered Kyiv NATO-like security guarantees and voiced confidence Moscow would accept.

"I think we're closer now than we have been ever," Trump told reporters, after he spoke to Ukrainian counterpart Volodymyr Zelensky and a host of European leaders.

European defence stocks slid Tuesday following the update on the talks, analysts said.

"A peace deal between Russia and Ukraine looks to be back on the agenda but there have already been multiple false dawns this year," noted Derren Nathan, head of equity research at Hargreaves Lansdown.

Weak UK jobs data strengthened expectations that the Bank of England will trim borrowing costs on Thursday.

The European Central Bank is set to hold interest rates steady this week.

The yen held gains against the dollar ahead of an expected rate hike by the Bank of Japan on Friday.

Worries over the tech sector were also weighing on sentiment, with recent warnings about an AI-fuelled bubble compounded by disappointing earnings last week from Oracle and Broadcom. "Investors appear to be increasingly concerned about high tech valuations," said Trade Nation analyst David Morrison.