US employment data disappoints and sends markets down for the week

It was a rough end to the week for the markets following the crucial US non-farm payroll employment data for April. The FTSE 100 ended Friday at 5,655, down 111 on the day and down 2.1% for the week. The index is now only up 1.5% year to date (5,572 start to 2012)

The Dow Jones Industrial Average closed down 168  points, at 13,038, down 1.4% for the week. The S&P 500 Index ended at 1,369, down 2.4% for the week. The Nasdaq Composite ended at 2,956, down 3.4% since Monday. Apple, the Nasdaq composite index’s biggest component, fell 2.9% and lost 6.3% for the week, its worst week since October.

The United Stated Labour Department released data showing American payrolls climbed by 115,000 in April, after an upwardly revised 154,000 from 120,000 in March. For April, analysts were expecting 155-165,000 jobs,. The unemployment rate fell to 8.1%, a three-year low. The upward revisions in both February and March somewhat tempered the big shortfall in the April data but investors were still concerned about growth.

The original March data published before the Easter holiday also precipitated a big sell off in the markets. Corporate America remains strong as shown by the number of positive earnings announcements over the first quarter 2012 earnings season, but the economy, though in much better health than Europe, looks to be slowing. The Federal Reserve will be keeping an eye on the situation to pump in more quantitative easing (QE) if necessary, but the feeling is that the situation is not concerning enough at present for the Fed to intervene again given interest rates are so low at 0.25-0.5%.

Berkshire Hathaway, Warren Buffet’s investment company, doubled first-quarter net income to $3.25 billion, or $1,966 per Class A share, from net income of $1.51 billion, or $917 per Class A share, in the same quarter in 2011. Expectations were for income of $1780-1.800 a share. Operating earnings, which exclude net realized investment gains and losses, were $2.67 billion, or $1,615 per Class A share, compared with operating earnings of $1.59 billion, or $966 per Class A share, a year ago.

With the numbers out of the way, the focus returns to Europe. French Presidential elections conclude today, with socialist François Hollande looking likely to take power from Nicolas Sarkozy. Hollande is focused on an agenda to stimulate French growth through spending which may unnerve investors in the Eurozone.

With risk off in investors minds, AIM oil and gas has had a rough time of late! Certainly some good investing opportunities starting to present themselves. The 1 month losses are as follows:

Chariot oil and gas -13.1% (12% this week)

Bowleven -7%

Xcite Energy -3.5%

Rockhopper Exploration -2.2% (8% on the week)

Caza oil and gas -3.6%

Gulf keystone Petroleum -12%  (it was 425p in February on takeover rumours, now 214p)

Desire Petroleum -11% (-11.2% on the week)

Hope it wasn’t too rough a week for you all.

Contrarian Investor UK