Weak US jobs data fuel hopes of gentler Fed rises

WEAKER than expected US jobs numbers helped spur stock markets around the world by triggering hopes that a cooling American economy will lead to softer rate rises from the Federal Reserve.

US employers were trying to fill 10.1m vacancies on the last day of August, the Bureau of Labor Statistics said, marking a 10pc drop in job postings from July. The number came in marginally lower than the 10.4m economists had been expecting.

The data suggest the US’S red-hot labour market continues to cool, which should put downward pressure on inflation.

The Fed currently sees wage growth of around 6.5pc a year as stoking already high inflation. The central bank has raised rates by 0.75 percentage points at its last three meetings in an attempt to curb price rises, with speculation it could follow with another 0.75 percentage point rise at its next meeting.

Investors hope the August jobs data will mean the Federal Reserve can raise interest rates at a gentler pace, providing some relief for stock prices.

The drop in job openings triggered a jump in equities. The European Stoxx 600 Index increased by 3.1pc in its third day of gains, making it the best performance since mid-march. In London, the FTSE 100 index rose by 2.6pc.

Consumer-focused businesses were boosted by hopes that gentler rate rises will leave people with more to spend.

Ocado gained 8.9pc, while the Irish bookmaker Flutter Entertainment, which owns Paddy Power and Betfair, had the steepest rise at 9.2pc.

In the US, the S&P 500, which had

‘We’re seeing a bit of an unwind. The psychology is that we’ve seen the worst of the rate hikes behind us’

suffered its worst September in two decades, rose by 2.5pc.

“We’re seeing a bit of an unwind in circumstances that had everybody in a panic last week,” Steve Sosnick, chief strategist at Interactive Brokers, told Reuters.

“Today, the psychology is that we’ve seen the worst of the rate hikes behind us,” he added.

US government data show that more people were laid off in August although the figure remains at historically low levels.

There was also a slight increase in workers ditching their job, mostly in favour of better opportunities.