Rising markets are nervous and a fall will also affect UK investors, says HAMISH MCRAE

If you think about it, it’s ridiculous. Judging by the anxious reports of market commentators, the US financial community was eagerly awaiting the non-farm payrolls figures on Friday.

Was the US headed for a recession? Had the Federal Reserve made a grave mistake by not cutting interest rates sooner? Should it reduce them by half a percentage point instead of the usual quarterly rate when it meets later this month?

But when the numbers came in weaker than expected, they punished the tech sector and pushed the S&P 500 into its worst week this year.

The absurd thing is that a set of statistics, which will be reviewed anyway, is given so much importance.

It’s true that job creation was a little weaker than expected, but 142,000 jobs were added last month, unemployment fell from 4.3 percent to 4.2 percent and average incomes rose.

Add to this the revisions to previous data, which show that fewer jobs have been created than previously thought, and these numbers only confirm what we already knew.

The U.S. economy is still growing, but at a slower pace. The Federal Reserve will cut interest rates this month, almost certainly by a quarter of a percentage point, and the idea that it has somehow failed the country is nonsense.

The US economy may or may not fall into recession next year – I think the likelihood is that it won’t – but a delay of a few weeks in cutting interest rates will make no difference either way.

It is interesting, however, that the market mentality is so febrile, and that is important for us on this side of the Atlantic.

There is a climate of nervousness, unease and fear in the air. Investors are desperate for reassurance.

They know that stocks are still near all-time highs, but the S&P 500 index took a nasty tumble in July. While it later recovered most of the lost ground, the last few days have been very weak.

They need a positive news flow to justify the high levels prices are still at, and those payrolls numbers were not strong enough to do that.

There is a temptation for shareholders who have made huge profits from their stakes in high-tech companies to cash out some of those profits.

The biggest names in the American investment community – Stanley Druckenmiller, George Soros and, most famously, Warren Buffett – have all reported some major selling.

This sets a tone for small investors: If people with a lot more money think it’s time to sell, maybe they should, too.

There is also history. After a great run to record levels, as has happened in recent weeks, it was almost always followed by a series of deep falls.

So far we’ve had one, from mid-July to early August. It makes sense to wait longer, and it seems we’re going through the second dip right now.

These falls are concentrated in high-tech giants rather than corporate America, but because valuations are so huge, a lot of wealth is being destroyed.

Take Nvidia, for example, which was valued at over $3 trillion. On Friday, it was back at around $2.5 trillion. That $500 billion loss is equivalent to the market capitalization of the US oil company Exxon Mobil.

You could say the wealth was never there in the first place, that Nvidia’s valuation was unreasonably high, but that’s small consolation to anyone who bought the stock at the peak.

This uncertainty is expected to continue through the fall until it becomes clear, one way or another, whether the U.S. is going to fall into recession. That concern will condition our markets here.

On the one hand, our stocks are cheap and global investors are starting to appreciate that.

But because the US market is so important, low prices there will inevitably take their toll on us here. It’s frustrating, but that’s how markets work.

For the long-term investor, it is a good opportunity to buy the dips, but we must keep in mind that the mood of US investors could worsen if the economy seems to falter, and it would be naive not to expect some dubious data in the coming weeks.