A RISE in the number of new jobs created in the United States last month has raised the spectre of an increase in US interest rates and sent the financial markets sharply lower. However, President Clinton hailed the news as proof of a strong economy. The US Treasury bond market lost two points within 15 minutes of the release of figures showing that employment rose by 348,000 in May, and by 163,000 in April rather than the original estimate of 2,000. Share prices tumbled, triggering the New York Stock Exchange's automatic curbs on trading.
By late morning the Dow Jones index was down nearly 37 points at 5,630.62. However, it closed last night at 5,697.11, a rise of 29.92. The yield on the benchmark long term Treasury bond had risen to 7.07 per cent.
Share prices and gilts in London, already ambivalent about Thursday's cut in base rates, followed suit. The FTSE 100 index closed 53.5 points down at 706.8.
In Dublin the ISEQ index closed down 2555.45 down by 20.72 points, while Government gilt prices also dropped. The yield or interest rate on five year Irish gilts rose as a result to 7.03 per cent from 6.92 per cent the previous day.
In the markets the initial reaction was a rush to sell, amid fears that the Federal Reserve will raise its key interest rate - possibly by a full half point from the current level of 5.25 per cent - when its policy making Open Market Committee next meets in July.
Yesterday, however, Mr Clinton brushed away the fears, claiming the unemployment news showed that growth was "steady and strong" with "no evidence of inflation".
