Stocks held near record highs on Friday as investors waited to see if U.S. payroll figures will alter their bets on when central banks row back on pandemic stimulus and whether inflation is here to stay.
NEW YORK: Global stock markets rose on Friday on a better-than-expected U.S. monthly jobs report that signaled the world’s largest economy ended the second quarter with strong growth momentum, while U.S. bond prices fell on investor worries over the Federal Reserve’s response.
Data showed U.S. job growth accelerated in June as nonfarm payrolls increased by 850,000 jobs after rising by 583,000 in May, although the unemployment rate rose to 5.9per cent from 5.8per cent the previous month. Economists polled by Reuters had forecast payrolls advancing by 700,000 jobs.
The MSCI All Country World index rose 0.12per cent, and the pan-European STOXX index rose 0.24per cent, while in the United States, the S&P 500 and Nasdaq hit record highs.
“For capital markets, equities and bonds, this was a Goldilocks report,” said Darrell Cronk, chief investment officer at Wells Fargo wealth and investment management. “This was perfect. There were enough jobs that you’d want to see but not so many that it concerns people that the Fed may have to act sooner.”
Still, gold jumped as much as 1per cent earlier on Friday, closing in on US$1,800, on a weakened dollar as investors weighed prospects that Fed policy would tighten following the jobs report. On Wall Street, the Dow Jones Industrial Average rose 40.28 points, or 0.12per cent, the S&P 500 gained 13.56 points, or 0.31per cent, and the Nasdaq Composite added 40.36 points, or 0.28per cent.
U.S. government bond prices for the 10-year note fell to yield 1.4407 percent. Euro zone government bond yields fell, as investor fears over the rise in COVID-19 cases beat the strong U.S. economic data. Germany’s 10-year bond yield, the euro zone benchmark, dropped 3.5 basis points to -0.20per cent, its lowest level since mid-June.
The dollar slipped from a three-month high on Friday, weighed down by some of the weaker details of what was an overall strong U.S. nonfarm payrolls report for June.
U.S. employment remains about 6.8 million jobs below its peak in February 2020. There are a record 9.3 million job openings. The dollar index fell 0.065per cent, with the euro down 0.13per cent to US$1.1833.
The Japanese yen strengthened 0.19per cent versus the greenback at 111.30 per dollar.
While the prospects of a strong economic recovery underpin equity markets, investors remained nervous that a sharp recovery from the pandemic could push up inflation to an uncomfortable level for the Fed.
Former U.S. Treasury Secretary Lawrence Summers said massive U.S. fiscal spending will set off inflationary pressures of a kind not seen in a generation, but others argue that until wage pressures return in force, talk about a return to 1970s-style inflation is just that.
Spot gold added 0.4per cent to US$1,782.81 an ounce. U.S. gold futures gained 0.41per cent to US$1,783.10 an ounce.
Oil prices edged lower after OPEC+ ministers delayed an output policy meeting, with sources saying the United Arab Emirates had balked at proposals that included raising supply by 2 million barrels per day by the end of the year.
Brent crude was last down US$0.20, or 0.26 per cent, at US$75.64 a barrel. U.S. crude was last down US$0.33, or 0.44per cent, at US$74.9 per barrel.
(Reporting by Huw Jones in London and Elizabeth Dilts Marshall in New York; editing by Jonathan Oatis)