Unemployment at 6.1%, Oil, Metals, Stocks Fall

123jump.com Staff
05 Sep, 2008
New York City

U.S. benchmark indexes fell between 1% and 2% after the release of August unemployment data. The jobless rate increased to 6.1% from 5.7% and number of people unemployed increased by 84,000. Stocks fell quickly as crude oil and metals declined. Stock indexes around the world fell, as investors showed aversion to risk. Russian market and currency fell sharply after investors flee Russia on continued fall in commodities prices and an ongoing conflict with Georgia.

[R]11:20AM New York – U.S. and European markets fall for the second day in a row as the U.S. payroll data suggested rising unemployment.[/R]

The latest payroll data, global aversion to risk and continued fall in crude oil and commodities prices dragged markets averages lower in the morning. After a sharp sell-off in the U.S. benchmarks in Thursday trading, stocks in New York fell after more than 90 minutes of trading.

Unemployment in August rose to 6.1% from 5.7% in July as businesses trimmed payroll in manufacturing, mining and service sectors. Non-farm payroll declined 84,000 in the month.

According to a separate unemployment household survey, the number of unemployed persons rose by 592,000 to 9.4 million in August, and the unemployment rate increased by 0.4 percentage point to 6.1%. Over the past 12 months, the number of unemployed persons has increased by 2.2 million and the unemployment rate has risen by 1.4 percentage points, with most of the increase occurring over the past 4 months, noted the Bureau of Labor Statistics.

In August, the number of long-term unemployed (those jobless for six months or more) rose by 163,000 to 1.8 million, an increase of 589,000 over the past 12 months.

Crude oil, natural gas and gasoline in New York trading dropped in the morning. Oil futures of immediate month delivery fell $2.24 or 2.2% to $105.95 a barrel and natural gas declined 4 cents to $7.277 per Mbtu. Copper, lead and nickel dropped between 3% and 4%.

Markets in Asia dropped sharply tracking the losses in the U.S. trading. Russian stock market index dropped 3.5% in today’s trading. The ongoing conflict involving Georgia, falling metals and crude oil prices and foreign investors dumping Russian assets have dragged the market index down 36% in the last two months. Ruble has fallen to a one-year low against dollar and euro as investors sold nearly $4.3 billion of assets in the last two months.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 345.43 or 2.75% to 12,212.23, Hang Seng index in Hong Kong decreased 456.20 or 2.24% closed to 19,933.28.ASX 200 index in Australia decreased 102.40 or 2.06% to close 4,877.10. The KL Composite index in Malaysia decreased 14.52 or 1.34% closed to 1,070.54.

The Kospi Index in South Korea decreased 22.05 or 1.55% to close at 1,404.38, SET index in Thailand closed lower 9.05 or 1.38% to 645.80 and JSE Index in Indonesia decreased 52.67 or 2.54% to 2,022.56. The Sensex index in India decreased 415.27 or 2.79% closed to 14,483.83.

Europe Markets Review

In London FTSE 100 Index traded lower 6.90 or 0.13% to 5,355.20, in Paris CAC 40 Index decreased 22.50 or 0.52% to 4,281.51 and in Frankfurt DAX index traded lower 36.18 or 0.58% to 6,243.39. In Zurich trading SMI decreased 42.71 or 0.60% to 7,041.94.

Earnings Review

National Semiconductor Corporation a semiconductor company focused on analog and mixed-signal integrated circuits first quarter revenues declined 1% to $466 million and net income decreased 7% to $80 million or 33 cents a share.

J D Wetherspoon plc, the owner of almost 700 U.K. pubs said full year revenues rose 2.1% to £907.50 million from £888.47 million a year earlier. Net profit in the full year fell 32% to £35.54 million or 25.1 pence per basic share compared to net income of £46.83 million or 31.6 pence per share, a year earlier.

J D Wetherspoon plc ((JDW)) in the last one year traded as high as 608p in September 2007 and as low as 167.75p in July 2008. Based on the yesterday’s closing price the company has a market cap of £360.63 million.