Masssive US job losses in November and news that the US unemployment rate jumped to a 15-year high of 6.7 percent rocked investor sentiment Friday and sent the price of oil plummeting – underscoring the depth of the global financial crisis which this week prompted a slew of interest rate cuts worldwide. The Labor Department reported that the economy lost 533,000 jobs last month, far exceeding forecasts by some analysts for a loss of 325,000. European markets fell hard on the news, with the London FTSE 100 index plunging 2.56 percent, the CAC 40 in Paris shedding 4.46 percent while the Dax in Frankfurt lost 3.85 percent. Market reaction was immediate, with shares, oil and the dollar falling, and US Treasury prices leaping. “These are horrendous numbers ... this is an economy that is in absolute free-fall right now. Confidence has collapsed,” said Nigel Gault, chief US economist at Global Insight. Neighbouring Canada registered more job losses in November than any other month since June 1982. Crude oil prices slumped close to $40 a barrel in trading on Friday as the United States lost a stunning half a million jobs in November, raising prospects of a steep drop in energy demand. In London, Brent North Sea crude for delivery in January hit $40.78 a barrel, the lowest level since the start of 2005. Light sweet crude for January slid to $42.39 in New York. The Friday report had been preceded by a new round of job cuts by big US companies and news that US government unemployment aid had hit a 26-year high. The news had dampened sentiment and undermined the impact of historic interest rate cuts in Britain and the eurozone. World share prices slid on Friday, while government bonds rose and the dollar dropped against the yen after US employers axed a shocking 533,000 jobs in November for the weakest performance in 34 years. “It's just a disaster. You've got the biggest job losses in 35 years and on top of that about 200,000 of backward revisions,” said Stephen Stanley, chief US Economist, at RBS Greenwich. Futures fully price a 50 basis point US interest rate cut, which would take the fed funds rate to 0.50 percent. The implied prospects for a cut to 0.25 percent jumped to 76 percent from 64 percent late on Thursday. The euro zone, Britain, Sweden, New Zealand and Denmark all cut interest rates aggressively on Thursday. World share prices as measured by MSCI's all-country index extended early losses to fall 1.2 percent, while US stock futures were down around 2 percent – pointing to a lower Wall Street open. Benchmark 10-year Treasury notes were trading 10/32 higher in price for a yield of 2.52 percent compared with 2.56 percent late on Thursday. Benchmark yields, which move inversely to prices, are trading at the lowest in over five decades. The London FTSE 100 index showed a loss of 2.74 percent after the data was published before pulling back slightly to show a fall of 2.37 percent to 4,064.97 points. In Paris, the CAC 40 was down 4.46 percent to 3,020.16 points while in Frankfurt the DAX index lost 3.47 percent to 4,406.03 points. The Vienna stock exchange's blue-chip ATX index was showing a loss of 5.07 percent or 89.39 points to 1,673.58 points. Asian markets were mostly lower Friday as a slew of dismal US economic news overshadowed big rate cuts from central banks in Europe. Japan's Nikkei 225 average slipped 6.73 points, or 0.1 percent, to 7,917.51 and markets in Australia, Shanghai, Taiwan, Indonesia and Malaysia also retreated. Hong Kong's Hang Seng index gained 1.9 percent to 13,771.05 and South Korea's Kospi was up 2.1 percent at 1,028.13. “There is no major funding going into the market, so it is losing momentum,” said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. “Major investors are still staying on the sidelines,” he said. Big interest-rate cuts by the ECB and Bank of England failed to give much of a lift to sentiment and investors also contended with a raft of weak data on the world's largest economy. Stock markets showed little enthusiasm for the rate cuts, which would normally be expected to boost sentiment.
