NEW YORK (Reuters) - Stocks on major markets fell on Friday, closing out another tough week for equity markets, after the monthly U.S. employment report failed to provide a clear signal on the likelihood of the first Federal Reserve interest rate rise for nearly a decade later this month.
The U.S. added 173,000 jobs in August, fewer than expected, but job gains in prior months were revised higher and the unemployment rate dropped to a seven year low at 5.1 percent.
“Regardless of the global dislocation for equities, investors still seem to be preparing for a lift-off in the fed funds rate,” said Andrew Wilkinson, chief market strategist at Interactive Brokers LLC in Greenwich, Connecticut. “There’s not a lot to stop the onset of tightening at some point in the near future,” he added.
U.S., European and Japanese stocks all ended the day and the week lower, though the euro and yen remained firm on Friday, while U.S. Treasury yields edged lower.
On Wall Street, S&P 500 index .SPX slid 1.53 percent to 1,921.22 and lost 3.4 percent for the week, but held above the three year low seen last week, with the Chinese stock market closed for a holiday for the last two days after it saw a two year low the previous week.
The CBOE Volatility Index .VIX, Wall Street’s so-called fear gauge, closed up 7.89 percent at 27.63, at about double the level seen for the most part this year until last months bout of volatility.
The pan-European FTSEurofirst 300 index .FTEU3 closed down 2.5 percent to 1,392.63 points, and was off 3.0 percent for the week.
MSCI’s all-country world stock index .MIWD00000PUS slid 1.65 percent, and lost 3.7 percent for the week, while its emerging markets index .MSCIEF fell 1.96 percent and lost 3.8 percent for the week.
“One of the biggest problems we face is that there is no historical template for current global market conditions so we’re all flying blind to a large degree,” said Deutsche Bank credit strategist Jim Reid.
“Never before have so many of the most important countries in the world printed so much money and left base rates so low for so long.”
U.S. medium- and long-dated Treasuries prices rose, while short-dated prices were slightly lower.
The benchmark 10-year Treasury US10YT=RR rose 11/32 in price to yield 2.1297 percent on Friday, while the U.S. two-year note US2YT=RR fell slightly to yield 0.7046 percent.
Euro zone bond yields fell further following a strong signal from the European Central Bank on Thursday that it is willing to take further steps to shore up the currency bloc’s economy.
German 10-year yields DE10YT=TWEB, the euro zone benchmark, fell 7 basis points to 0.67 percent, their lowest level in more than a week.
After a two day holiday in China, U.S. investors head into a long weekend with the U.S. Labor Day holiday closing markets on Monday.
“The market’s confused. It doesn’t know what to buy,” said John Augustine, chief investment officer at Huntington Trust in Columbus, Ohio. “What markets seem to be playing today is a weaker China and a more hawkish Fed.”
The U.S. dollar index .DXY of major currencies fell 0.20 percent, while the dollar JPY= last traded at 118.99 yen, or a loss of 0.89 percent against the yen. The euro EUR= edged up 0.26 percent at $1.1150.
Expectations of a September rate hike by the Fed have waned as a slowdown in China has brought increased market volatility across asset classes, causing the U.S. dollar’s rally of the past year to wane.
Crude oil futures fell as traders paid little heed to a drop in the number of U.S. rigs drilling for oil, focusing instead on this year’s ongoing supply glut.
Brent crude LCOc1, the global benchmark for oil, fell $1.07 to settle at $49.61 a barrel. U.S. crude’s front-month CLc1 settled down 70 cents to $46.05.
“Oil is only the beginning of this story,” Ian Bremmer, president of Eurasia Group, noted this week.
“In fact, the value that producers of oil, gas, metals, minerals and other commodities have lost just in the past year comes to about $2 trillion, the size of India’s entire economy,” he said.
“China by itself accounted for about 17 percent of the world’s overall GDP in 2014, but its demand for imports has already fallen 14.6 percent over the first seven months of 2015.”
The Reuters commodity index .TRJCRB ended down 0.9 percent Friday and is down 14.0 percent for the year to date.
Reporting by Herbert Lash; Editing by Chizu Nomiyama and Clive McKeef