Surge in US jobs stokes expectation of Fed hike creating headache for new boss Kevin Warsh and rattling markets

Traders ramped up bets on a US rate hike last night after much stronger than expected jobs figures – creating a major headache for new Federal Reserve chief Kevin Warsh and rattling Wall Street.

Closely-watched official data showed the world’s biggest economy added 172,000 jobs last month, twice as many as expected.

That prompted markets to bet that an interest rate hike by the US Federal Reserve by the end of this year was a near certainty.

Yet any such move would bitterly upset Donald Trump, who angrily criticised former Fed chief Jerome Powell for not cutting rates and has just appointed Warsh to replace him.

And the rate hike speculation caused a sell off on New York markets that were already jittery following disappointing results from US chipmaker Broadcom this week, which have knocked technology stocks.

Last night the S&P 500 was down nearly 2 per cent and the Dow Jones by nearly 1pc while the tech-focused Nasdaq plunged 3 per cent.

Yesterday’s job figures appeared to indicate that the US economy is in robust enough shape for the Fed to hike rates as it battles to keep a lid on inflation.

Warsh will take charge of his first rate-setting meeting later this month as the central bank grapples with price rises that have been exacerbated by Trump’s war on Iran.

Isaac Stell, investment manager at Wealth Club, said: ‘With inflation pressures building and the labour market remaining robust, the bar for rate hikes continues to fall, increasing the likelihood of further policy tightening in the near term.’