Market snapshot: Nvidia among big fallers as Wall Street hits reverse

Investors were left guessing after a jobs report which contained conflicting messages, while more broadly the main indices endured a losing week as markets paused for breath.

Despite rising to fresh record highs earlier in the trading session, the tech-heavy S&P500 and Nasdaq indices swung lower at the close. A general bout of profit taking after the recent rally was likely to have been a main contributor, while a rare drop of 5% for current market darling NVIDIA Corp (NASDAQ:NVDA) had a disproportionate effect on these indices, given its huge market capitalisation following a share price surge of more than 260% over the last year.

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The non-farm payrolls report was initially well received, but on reflection the details of the release were enough to muddy the waters. A headline number of 275,000 jobs having been added in February was well ahead of the consensus of around 200,000 and suggested that the labour market could still be running hot.

However, the January figure was revised down from the previous blockbuster number of 353,000 to 229,000, while in terms of this release, unemployment rose from 3.7% to 3.9% and wage growth was lower than expected. The numbers have not changed the dial for an expected interest rate cut from the Federal Reserve in June, even if this set of data was inconclusive.

This week could help clarify the position somewhat after the release of consumer and producer price reports which will give a further indication of the inflationary picture. The previous January numbers were higher than anticipated, stoking fears of renewed inflation pressure on the upside, while also seemingly confirming that the final mile of achieving the 2% target is proving to be the most difficult.

In the meantime, and despite a lower trading week, the main indices remain comfortably ahead in the year to date, with the Dow Jones having added 2.7%, the S&P500 7.4% and the Nasdaq 7.2%.

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Asian markets had mixed fortunes overnight, despite some generally positive economic news. Japan’s Nikkei slid by over 2%, with some weakness in technology shares, despite a revised economic release which revealed GDP growth of 0.4% on an annualised basis for the fourth quarter, reversing the initial estimate of a 0.4% contraction and therefore avoiding a technical recession. The number also increased the possibility of a normalisation of interest rates at the next Bank of Japan meeting, even though private consumption and higher inflation has been rather tepid of late.

For China, a rise in February consumer prices interrupted the recent deflationary trend, with the number significantly stronger than the previous reading and also ahead of expectations. Chinese shares mostly ticked higher, although calls for some definitive stimulus to revive the flagging economy have for the most part fallen on deaf ears, with investors choosing to seek growth elsewhere in the region of late.

With pressure remaining on youth unemployment, weak consumer demand and a notably ailing property sector, the Chinese economy remains in need of a monetary lifeline which has not as yet materialised.

The more bearish sentiment washed on to UK shores in early trade, with ongoing questions over demand from China weighing on mining shares. Indeed, there was some mild weakness in companies with a strong notable exposure to China, such as Prudential (LSE:PRU) and Burberry Group (LSE:BRBY), although some buying interest in the pharma sector mitigated some of the initial broad-based markdowns.

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Even so, the FTSE100 remains unable to recover its losses for the year on anything like a sustainable basis, remaining down overall by 1.1%, with the more recent mild strength of sterling providing another headwind given the overseas earnings exposure which most of the constituents operate under.

The FTSE250 has had a modest recovery over recent trading days, although remaining down by 0.7% in the year to date. The resurgence of merger and acquisition activity, particularly aimed at some of the mid-cap UK names which have been trading on low historical valuations, has seemingly alerted some foreign buyers to the fact that there could well be some bargains available amid the current backdrop.