Stellar U.S. Jobs Report Fails to Light Up Markets

Data released Friday showed the U.S. economy added a staggering 300,000 jobs last month, providing some reassurance that the government did little damage to the wider economy, but the news failed to move investors.

But the first trading day in February came after a blockbuster month of January in which Wall Street saw its best start to the year in 30 years. 

"That's a tough act to follow, which helps explain a little bit of the sluggishness in the futures market this morning, as market participants question just how much longer this hot run ... can last," said Briefing.com analyst Patrick O'Hare, noting the S&P 500 was up 15 percent from its December 24 low.

Wall Street opened mixed, with the Dow adding 0.3 percent in the first minute of trading, while both the broader S&P 500 and tech-heavy Nasdaq Composite both moving lower.

European markets were also lacking strong trends in afternoon trading, with both London and Paris showing modest gains, while Frankfurt dipped.

"Yesterday, the market had a somewhat unstoppable feeling to it, which is perhaps an early indication (based on a contrarian viewpoint) that the rally is about to stop," added O'Hare.

Earlier this week the Federal Reserve fueled a rally on Wall Street by signaling a slowdown in its pace of American interest rate hikes this year.

China-U.S. trade talks this week ended with no deal but with both sides sounding notes of optimism and setting up more high-level meetings later this month, temporarily soothing concerns of an all-out trade war.

Friday's non-farm payrolls figures were being watched for signals about the state of the world's number-one economy, with the Fed having already warned of a global slowdown.

"This is another really strong jobs report with non-farm payrolls rising 304,000 in January ... and suggests that the U.S. economy is in great shape with businesses desperate for workers," said James Knightley, chief international economist at Dutch bank ING.

He added it "suggests that the U.S. economy hasn't been adversely impacted by the government shutdown in any meaningful way."

However growth in pay held steady just above inflation, and the jobless rate ticked up to 4.0 percent as the government was hit by a five-week shutdown.

"More people are being tempted back into the labor force –- the rise in the participation rate proves that –- but employers aren't paying over the odds to get them," said David Lamb, head of dealing at Fexco Corporate Payments.

"All this means inflationary pressure is modest, and the Federal Reserve will feel no hurry to push through its next interest rate hikes," he added.

Separately, official data showed Friday that eurozone inflation is moving further away from the European Central Bank's target of 2.0 percent -- indicating that the ECB would be less likely to raise interest rates this year.

In foreign exchange activity, the European single currency rose against the dollar.

The Shanghai stock market jumped Friday to close up 1.3 percent, as traders welcomed news that authorities had relaxed certain rules to make investing easier.

 - Key figures around 1430 GMT - 

London - FTSE 100: UP 0.6 percent at 7,007.75 points

Frankfurt - DAX 30: DOWN 0.1 percent at 11,160.90

Paris - CAC 40: UP 0.3 percent at 5,005.46

EURO STOXX 50: FLAT at 3,158.77

New York - Dow: UP 0.3 percent at 25,067.45

Tokyo - Nikkei 225: UP 0.1 percent at 20,788.39 (close)

Hong Kong - Hang Seng: FLAT at 27,930.74 (close)

Shanghai - Composite: UP 1.3 percent at 2,618.23 (close)

Euro/dollar: UP at $1.1469 from $1.1447 at 2200 GMT

Pound/dollar: DOWN at $1.3066 from $1.3108 

Dollar/yen: UP at 109.05 yen from 108.82

Oil - Brent Crude: UP 45 cents at $61.29 per barrel

Oil - West Texas Intermediate: UP 27 cents at $54.06