Stocks Drift Lower on Cooling US Labour Market While Peace Hopes Hit Oil

Global equity markets largely retreated on Tuesday as investors digested fresh evidence of a cooling US labour market, while oil prices slid sharply on renewed optimism that Russia’s war in Ukraine may be approaching a negotiated end. The combination of softer economic indicators and shifting geopolitical expectations unsettled sentiment across equities, commodities and currencies alike.

According to figures released by the US Labor Department, the American unemployment rate rose to 4.6 per cent in November, marking its highest level since 2021. The long-delayed report, held back by an extended government shutdown, also revealed that the US economy shed 105,000 jobs in October. Although hiring resumed in November, with payrolls increasing by 64,000, the pace of job creation remained well below levels seen earlier in the year, reinforcing the view that the labour market is gradually losing momentum.

Market analysts described the data as broadly weaker than anticipated, though not severe enough to trigger alarm. Fawad Razaqzada, an analyst at Forex.com, observed that expectations of an interest rate cut by the US Federal Reserve as early as March climbed to around 60 per cent following the report, up from roughly 50 per cent previously. Ordinarily, the prospect of looser monetary policy might support equity prices, yet Wall Street’s main indices moved lower as investors focused instead on the implications of a slowing economy.

Additional data painted a mixed picture of consumer activity. US retail sales were flat in October, defying forecasts for a modest increase, while September’s growth was revised down to just 0.1 per cent. However, Bret Kenwell of eToro noted that a key component of the report used in calculating gross domestic product reached its highest level since the summer. “The data reinforce two themes currently shaping the outlook: a resilient consumer alongside a cooling labour market,” he said.

In commodity markets, oil prices fell to multi-year lows. Brent crude slipped below 60 dollars a barrel for the first time since May, while US West Texas Intermediate briefly dropped under 55 dollars, a level not seen since 2021. Hopes of a potential peace agreement in Ukraine have fuelled expectations that sanctions on Russian oil could eventually be eased, adding to concerns about global oversupply. US President Donald Trump said on Monday that a deal was “closer than ever”, citing proposed NATO-style security guarantees for Kyiv and confidence that Moscow would accept the terms.

Kathleen Brooks, research director at XTB, also highlighted bearish technical signals in the oil market, noting that spot prices for Middle Eastern crude were trading below futures contracts—often a sign that traders expect further price declines.

European defence stocks fell amid the renewed peace talk optimism, while investors also monitored central bank developments. Weak UK employment data bolstered expectations that the Bank of England could cut interest rates later this week, whereas the European Central Bank is widely expected to keep policy unchanged. In Asia, the yen held firm against the dollar ahead of a potential interest rate rise by the Bank of Japan on Friday.

Among individual stocks, Pfizer shares fell 3.4 per cent after the pharmaceutical giant forecast a decline in full-year adjusted earnings per share, as it steps up investment in new medicines to offset waning Covid-related revenues.

Key Market Figures (around 21:15 GMT)

As markets balance slowing economic momentum against the prospect of easier monetary policy, investors remain cautious, with geopolitical developments and central bank decisions set to dominate the near-term outlook.