US Business

Stocks slid and the dollar surged Friday after US jobs data showed only a timid slowdown in the labour market, setting the stage for further aggressive interest rate hikes. 

Equity markets have taken a battering in the past couple of months as the US Federal Reserve has made it clear it intends to continue aggressively raising interest rates until soaring inflation is tamed, even if that means sending the economy into a recession.

There was a brief rebound at the start of the week as investors hoped data pointing to an economic slowdown would allow the Fed to “pivot”, or slow down rate hikes.

However, the jobs report shows the US labour market is still robust, with hiring in the US economy slowing slightly in September, to a net gain of 263,000 jobs, from 315,000 in August. 

That was more than the consensus forecast for a net gain of 250,000, sending equities lower and the dollar higher. 

“Those hoping for a Fed pivot have been sorely disappointed with today’s job numbers, which have confirmed that US economy continues to rumble along quite well,” said Chris Beauchamp, chief market analyst at online trading platform IG.

“The latest bear market bounce has now begun to wilt as investors wearily return to expectations” of a couple more considerable rate hikes this year, followed by more in 2023. 

Wall Street was sharply lower in late morning trading, with the Dow sliding 1.5 percent. The broader S&P 500 index fell 2.0 percent and the tech-heavy Nasdaq Composite tumbled 2.8 percent.

In Europe, Frankfurt fell 1.6 percent and Paris shed 1.2 percent. London ended the day less than 0.1 percent lower. 

“Investors are simultaneously fretting that the fall in the pace of hirings indicates a slowing economy, but also that the better-than-expected data shows that the jobs markets hasn’t slowed enough to stop the Fed from hiking rates aggressively,” said markets analyst Susannah Streeter at Hargreaves Lansdown brokerage.  

– ‘Pivot party gang’ –

Rising interest rates boost the dollar as foreign investors seek to buy dollar-denominated debt. But high interest rates raise borrowing costs and dampen consumption, which are bad for companies and thus their share prices.

Stephen Innes at SPI Asset Management said it is “unsurprising to see solid dollar buying with stocks and gold tanking as the labour market strength should quieten any Fed pivot talk for now, if not deal a severe knockout blow to the pivot party gang.”

The next data point that the Fed, and investors, will be scrutinising is the consumer price index report next week.

Adding to unease on markets was a warning from US President Joe Biden that the world faced nuclear “Armageddon” for the first time since the 1962 Cuban missile crisis.

He told a Democratic Party fundraiser in New York that Russian President Vladimir Putin was “not joking” when he threatened to use nuclear weapons over the Ukraine war.

Elsewhere, oil prices jumped and were set for their biggest weekly gain since March after OPEC and other major producers led by Russia agreed to slash daily output by two million barrels.

– Key figures around 1530 GMT –

New York – Dow: DOWN 1.5 percent at 29,480.26 points

EURO STOXX 50: DOWN 1.7 percent at 3,375.46

London – FTSE 100: DOWN less than 0.1 percent at 6,991.09 (close)

Frankfurt – DAX: DOWN 1.6 percent at 12,273.00 (close)

Paris – CAC 40: DOWN 1.2 percent at 5,866.94 (close)

Tokyo – Nikkei 225: DOWN 0.7 percent at 27,116.11 (close)

Hong Kong – Hang Seng Index: DOWN 1.5 percent at 17,740.05 (close)

Shanghai – Composite: Closed for a holiday

Pound/dollar: DOWN at $1.1119 from $1.1161 on Thursday

Euro/dollar: DOWN at $0.9787 from $0.9794

Euro/pound: UP at 87.95 pence from 87.74 pence

Dollar/yen: UP at 145.20 yen from 145.11 yen

Brent North Sea crude: UP 3.0 percent at $97.28 per barrel

West Texas Intermediate: UP 3.4 percent at $91.49 per barrel

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US President Joe Biden signed an executive order on Friday designed to protect the privacy of personal data transfers between the EU and the United States and address European concerns about US spying activity.

The executive order provides a new legal framework for transatlantic data flows that are critical to the digital economy, the White House said.

The move by Biden is the latest attempt to end years of court battles in which activists in Europe have questioned the legality of the data transfers and thrown the EU operations of US Big Tech into jeopardy. 

“This is a culmination of our joint efforts to restore trust and stability to transatlantic data flows,” Commerce Secretary Gina Raimondo told reporters. 

“It will enable a continued flow of data that underpins more than a trillion dollars in cross-border trade and investment every year.”

The EU’s Justice Commissioner Didier Reynders hailed the executive order as a “significant step”, though officials in Brussels warned that it was only the start of a process that could take months to reach a new data deal.

US tech giants have faced a barrage of lawsuits from EU privacy activists concerned about the ability of US intelligence services to access the personal data of Europeans that use Facebook or Google for their internet needs.

Europe’s top court has invalidated previous arrangements, known as equivalency deals, after hearing complaints that US laws violate the fundamental rights of EU citizens.

The White House said the executive order addresses concerns raised by the Court of Justice of the European Union when it ruled that the previous framework known as Privacy Shield did not provide adequate protection.

– Court battle ‘likely’ –

Austrian privacy activist Max Schrems, whose legal campaigns brought down the previous pacts, said he would likely challenge the new arrangement. 

“We will likely attack (the deal) in court,” he told AFP, putting the chances at “90 percent”. 

“We need to first analyse it in detail, which will take several days,” he said, adding that at first glance it seems the central privacy issues “haven’t been resolved”.

Privacy Shield, struck down in July 2020, was the successor to another EU-US deal, Safe Harbor, which was itself torpedoed by a court ruling in 2015.

Businesses have since resorted to legally uncertain workarounds to keep the data flow moving, with hope that the two sides could come up with something stronger in the long term.

Striking a new agreement “is of great importance,” said Christian Borggreen, senior vice predident in Europe for the Big Tech lobby, the Computer & Communications Industry Association.

“It will support continued transatlantic commerce, strengthen data protection, and provide legal clarity for data transfers between the EU and US,” he said.

– ‘Robust commitments’ –

Raimondo expressed confidence that the new arrangement, which builds upon an agreement in principle announced in March, will survive the intense legal scrutiny that began after revelations by former National Security Agency contractor Edward Snowden of mass digital spying by US agencies.

“The EU-US data privacy framework includes robust commitments to strengthen the privacy and civil liberties safeguards for signals intelligence which will ensure the privacy of EU personal data,” she said.

The executive order requires that US signals intelligence activities be conducted “only in pursuit of defined national security objectives”.

US agencies must also “take into consideration the privacy and civil liberties of all persons” regardless of nationality or country of residence.”

It also creates an independent court for EU individuals “to seek redress if they believe they are unlawfully targeted by US intelligence activities.”

Judges on the newly created court will be appointed from outside the US Government and “review cases independently,” the White House said.

Their decisions will be binding.

US job gains slowed slightly in September, offering some good news for the Federal Reserve as it works to cool the economy, but official data Friday also showed wages continued to rise which underlined the challenge to tamping down rampant inflation.

President Joe Biden, who has seen his approval erode in the face of surging prices, cheered the data as an “encouraging sign” on the economy’s path, even while he said there is more work to do to help American families.

But the central bank likely will want to see more progress on slowing price gains, which have been the fastest in 40 years, before pulling back on its aggressive interest rate increases, and economists say another big hike remains likely next month.

The economy added 263,000 jobs last month, showing a steady slowdown from the blistering pace in 2020 and 2021, the Labor Department said in the closely-watched report. The unemployment rate slipped two-tenths of a percentage point to 3.5 percent.

“Today’s jobs numbers are an encouraging sign that we are transitioning to stable, steady growth. And more Americans are working than ever before,” Biden said on Twitter. “There’s more to do to grow our economy from the bottom up and middle out, but we’re making progress.”

But of more concern for policymakers, the report showed a 10-cent increase in average hourly earnings in the month to $32.46. 

Over the past 12 months, average hourly earnings have increased by 5.0 percent, still high but a slowing from the pace seen over the past year.

The central bankers are watching closely to see if wages continue to accelerate, which would fuel further inflation pressures.

The Fed has raised the benchmark lending rate five times this year and said more tightening will be needed to get inflation down, but acknowledge that the process could cause a painful economic slowdown.

“A moderation in job and wage growth will be welcome developments for Fed officials. However, these data do not change the near-term course of monetary policy,” Rubeela Farooqi of High Frequency Economics said in an analysis.

Fed officials in recent comments have made it clear that no single data report will change their trajectory since it will take time for inflation to get back down to the two percent goal, which will require more rate hikes.

– Worker shortage? –

Fed board member Christopher Waller warned that given ongoing price pressures, including from the US housing market, inflation is “not likely to fall quickly.”

“We haven’t yet made meaningful progress on inflation, and until that progress is both meaningful and persistent, I support continued rate increases,” Waller said in a speech Thursday.

Still, Robert Frick, corporate economist with Navy Federal Credit Union, called the September data “a Goldilocks jobs report.”

He said it was “cool enough to make the Fed happy that the ‘tight’ labor market is loosening, and warm enough to satisfy most Americans looking for work, or looking to switch jobs for higher pay.”

Jason Furman, a former White House economist, said only two “surprisingly low” inflation reports before the November 1-2 policy meeting could cause the Fed to pivot its stance.

“And while economic forecasting can be difficult, I’m reasonably confident the chances of that happening are precisely 0%,” Furman tweeted.

US employers continue to complain that they have difficulty filling open positions, and the Fed wants to see signs of an easing in the tight labor market.

The data showed notable gains in the leisure and hospitality sector and in health care, and a decline in government jobs.

The unemployment rate, which edged up in August as more workers came off the sidelines to join the labor force, slipped back last month, and the participation rate was barely changed at 62.3 percent as the pool of available workers was about steady.

Hurricane Ian, which caused massive devastation, especially in Florida, “had no discernible effect” on the data, which was collected before the storm made landfall.

Scammers stole cryptocurrency worth roughly $100 million from Binance, the world’s biggest exchange for cryptoassets, the firm said on Friday.

The total stolen was $580 million, but company chief Changpeng Zhao said roughly 80 percent had been frozen immediately, and the damage had been limited to less than $100 million.

He tweeted that “an exploit” in the system led to extra production of the exchange’s dedicated currency, BNB, but insisted the issue had been “contained” and told his seven million followers: “Your funds are safe.”

It is among the biggest thefts in cryptocurrency history and comes in a year where scammers preying on the sector have got away with billions of dollars.

In the most damaging incident, the Axie Infinity blockchain game was hacked for more than $500 million in late March.

Both scams exploited weaknesses in “cross-chain bridges” — the means used by investors to move assets from one blockchain to another.

Blockchains are digital ledgers that store details of transactions — the biggest is bitcoin but there are thousands of others.

Binance, which boasted of handling transactions worth $32 trillion last year, said in a statement that “a total of 2 million BNB was withdrawn”, which valued the heist at around $580 million.

Zhao later clarified in an interview with MSNBC that most of those coins had been frozen.

A Binance spokesman told AFP that rapid reaction and coordination meant “the majority of the funds remained in the exploiter’s address, while partners helped secure funds on other chains as well”.

– ‘Complete chaos’ –

Prominent crypto figures had taken to social media late on Thursday talking of a $600 million theft hours before the firm sent its first statement.

“Somebody on BNB just got hacked for (roughly) 2 million BNB,” wrote a developer who uses the name foobar on Twitter.

“The attacker is spewing funds across liquidity pools and utilising every bridge they can to get to safer chains. Complete chaos on the chain.”

Experts have been warning of security lapses on cross-chain bridges all year.

Chainalysis, a crypto analysis firm, said in August that bridge exploits had accounted for around $2 billion in thefts so far this year.

Elliptic, another analysis firm, said on Twitter it was helping to track down the Binance funds.

In a report this week, Elliptic said bridges “tend to accumulate large amounts of locked assets on numerous blockchains, many of which may not have advanced security or auditing cultures due to their relative obscurity”. 

“This has made bridges an attractive target for cybercriminals in the past,” it added.

Governments are concerned that cryptocurrencies are being used to fund terrorism, circumvent sanctions and prop up repressive regimes.

Experts believe groups linked to North Korea have been behind some of the most high-profile heists, including the Axie Infinity breach.  

US President Joe Biden’s administration released a new Arctic strategy on Friday as the strategically and environmentally important region suffers worsening effects from climate change and sees increased international competition.

Global warming is melting Arctic ice, opening previously closed areas to navigation and creating new opportunities for countries such as the United States, Russia and China to vie for resources and influence.

The situation is further complicated by the invasion of Ukraine by Russia — a major Arctic power — which has increased tensions between Moscow and Washington to a level not seen since the height of the Cold War.

“The Arctic — home to more than four million people, extensive natural resources, and unique ecosystems — is undergoing a dramatic transformation,” the strategy says.

“Driven by climate change, this transformation will challenge livelihoods in the Arctic, will create new economic opportunities, and could intensify strategic competition among countries.”

The strategy features four main pillars: security, climate change and environmental protection, sustainable economic development, and international cooperation.

“Our highest priority is to protect the American people and our sovereign territory and rights. We are committed to the security of our treaty allies and to supporting our partners in the region,” the strategy says.

To do this, Washington will “enhance and exercise both our military and civilian capabilities in the Arctic as required to deter threats and to anticipate, prevent, and respond to both natural and human-made incidents.”

As the impact of global warming grows, Washington wants to help Alaska — its northernmost state — to build resilience and adapt, and also aims to pursue international initiatives to mitigate emissions in the Arctic.

“Climate change generates greater impacts in the Arctic than in many more temperate regions, yielding unstable terrain, vulnerable coasts, changing ecosystems, and a worsening biodiversity crisis,” the strategy says.

– Russia cooperation ‘virtually impossible’ –

“We will support efforts to build Alaskan communities’ resilience in the face of dramatic changes on the Arctic’s horizon,” it says, noting that more than 60 percent of the state’s Native communities are considered “environmentally threatened.”

On the economic front, the strategy notes that melting Arctic ice — while a “stark indicator of accelerating climate change” — also presents opportunities.

“The US government will help create the conditions to catalyze responsible, inclusive, and transparent economic development in Alaska and across the Arctic,” it says, including via infrastructure development and supporting industries that increase opportunities for local communities.

The strategy says the United States values Arctic cooperation, but that Russia’s invasion of Ukraine has dealt the prospects of working with Moscow a significant blow.

“Russia’s brutal war in Ukraine has made this cooperation in the Arctic virtually impossible… at present. However, maintaining cooperation with our allies and partners in the near-term remains essential to advancing our objectives for the region,” it says.

It has been nearly 10 years since the last US Arctic policy document was released, and the new strategy acknowledges both the changing natural and geopolitical environment.

“This strategy addresses the climate crisis with greater urgency, given the developments that we’ve seen over the last eight to nine years,” a senior US administration official said ahead of its release.

It also “recognizes the increased strategic competition that we’ve seen in the Arctic in terms of Russia and (China) over the last decade, and… seeks to position the US to effectively compete and also manage those tensions.”

Stocks mostly slid and the dollar surged Friday after US jobs data showed only a timid slowdown in the labour market, setting the stage for further aggressive interest rate hikes. 

Equity markets have taken a battering in the past couple of months as the US Federal Reserve has made it clear it intends to continue aggressively raising interest rates until soaring inflation is tamed, even if that means sending the economy into a recession.

There was a brief rebound at the start of the week as investors hoped data pointing to economic slowdown would allow the Fed to “pivot”, or slow down rate hikes.

However, the jobs report shows the US labour market is still robust, with hiring in the US economy slowing slightly in September, to a net gain of 263,000 jobs, from 315,000 in August. 

That was more than the consensus forecast for a net gain of 250,000, sending equities lower and the dollar higher. 

“The understanding that the report is unlikely to soften the Fed’s rate hike path has sent equity futures to lows while the dollar is showing continued strength against the euro and Sterling,” said Briefing.com analyst Patrick O’Hare before Wall Street opened.

Wall Street opened lower, with the Dow sliding 0.9 percent. The broader S&P 500 index fell 1.2 percent and the tech-heavy Nasdaq Composite tumbled 1.8 percent.

In afternoon trading, Frankfurt slid 0.8 percent and Paris shed 0.5 percent. London was flat.

– ‘Pivot party gang’ –

Rising interest rates boost the dollar as foreign investors seek to buy dollar-denominated debt. 

Stephen Innes at SPI Asset Management said it is “unsurprising to see solid dollar buying with stocks and gold tanking as the labour market strength should quieten any Fed pivot talk for now, if not deal a severe knockout blow to the pivot party gang.”

The next data point that the Fed, and investors, will be scrutinising is the consumer price index report next week.

Adding to unease on markets was a warning from US President Joe Biden that the world faced nuclear “Armageddon” for the first time since the 1962 Cuban missile crisis.

He told a Democratic Party fundraiser in New York that Russian President Vladimir Putin was “not joking” when he threatened to use nuclear weapons over the Ukraine war.

Elsewhere, oil prices jumped and were set for their biggest weekly gain since March after OPEC and other major producers led by Russia agreed to slash daily output by two million barrels.

– Key figures around 1330 GMT –

London – FTSE 100: FLAT at 6,996.98 points

Frankfurt – DAX: DOWN 0.8 percent at 12,376.54

Paris – CAC 40: DOWN 0.5 percent at 5,905.01

EURO STOXX 50: DOWN 0.9 percent at 3,403.52

New York – Dow: DOWN 0.9 percent at 29,651.01

Tokyo – Nikkei 225: DOWN 0.7 percent at 27,116.11 (close)

Hong Kong – Hang Seng Index: DOWN 1.5 percent at 17,740.05 (close)

Shanghai – Composite: Closed for a holiday

Pound/dollar: DOWN at $1.1145 from $1.1161 on Thursday

Euro/dollar: DOWN at $0.9764 from $0.9794

Euro/pound: DOWN at 87.62 pence from 87.74 pence

Dollar/yen: UP at 145.06 yen from 145.11 yen

Brent North Sea crude: UP 1.3 percent at $95.65 per barrel

West Texas Intermediate: UP 1.2 percent at $89.53 per barrel

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Frustrated motorists faced another day of long waits at petrol pumps across France on Friday as a strike at energy giant TotalEnergies entered its 12th day.

TotalEnergies, among the world’s biggest oil companies, runs a network of around 3,500 filling stations in France, nearly a third of the total, with most of them low on fuel.

“Does anyone know of a petrol station around here that’s been re-supplied?” read a post in a local Facebook group Friday morning. “Where can I get ethanol?” posted another motorist in the hope of filling the tank before the weekend.

Several of TotalEnergies’ oil refineries have been blockaded by striking workers.

“We’ve been dry since Sunday,” a manager at a station in central Paris said on Thursday.

Since the start of September, TotalEnergies has cut petrol prices by 20 euro cents ($0.19) per litre to help vehicle owners cope with sharp rises in energy prices triggered by the war in Ukraine.

The average price for E5-type unleaded petrol is now 1.62 euros per litre, or 6.19 euros per gallon, up around four percent from only a week ago.

“Everybody wants to buy from us because we’re cheaper,” the station manager said.

Bottlenecks due to strong demand have been exacerbated by strike action over pay, which has cut the frequency of fuel deliveries in half, he said.

Anthony, a plumber in Paris, said traffic was blocked up Friday along an entire boulevard as early as 7:00 am when he started his morning rounds, as people tried to reach a TotalEnergies station in the 12th Arrondissement in the east of the capital.

– ‘Shareholders get a lot’ –

“It’s been like this since 5 o’clock this morning, and every morning before,” said the manager at an Agip station in Marseille, Ali Mansoibou, pointing at a long queue of cars waiting to be served.

Mansoibou said he allowed each driver to buy no more than 30 euros’ worth of fuel, but even so, “there’ll be nothing left for the weekend”.

The government has responded to the shortages by releasing fuel from strategic stocks, Energy Transition Minister Agnes Pannier-Runacher told the broadcaster BFM television late Thursday.

In addition, more supplies were being brought in from neighbouring Belgium and elsewhere, she said.

The supply situation would improve “within two or three days”, she predicted, saying that just 15 percent of all petrol stations in France had been affected.

But Thierry Defresne, head of the European works council at TotalEnergies, told AFP that “every site” at the company had announced their intention to extend the strike action.

“Shareholders get a lot, but workers are completely forgotten,” Defresne told RMC radio on Friday.

“Fabulous profits are being made, but they don’t want to offset the impact of inflation,” he said.

TotalEnergies paid out a special dividend to shareholders totalling 2.6 billion euros ($2.55 billion) after the company — like most in the sector — made exceptionally large profits from high energy retail prices.

The government appeared sympathetic to the wage demands on Friday, with Olivia Gregoire, minister for small and midsize companies, calling on energy majors to “listen to demands for salary rises”.

Most of the sector’s companies had posted “strong results”, she said. “We expect an effort in favour of workers.”

Prime Minister Elisabeth Borne called on management and workers at TotalEnergies to exercise “responsibility” in their negotiations and not “penalise the French people”.

Staff at the French branch of oil major ExxonMobil have also demanded higher wages, with angry demonstrators setting fire to wooden crates during a protest in northern France on Wednesday. 

Transport Minister Clement Beaune said fuel trucks would, exceptionally, be allowed to make deliveries on Sunday.

“We’re doing what we can to resolve this situation over the coming days,” he said.

TotalEnergies did not give any details about the impact of the strike on its supply situation, with a spokesperson telling AFP simply that the situation was “stable”.

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