Stocks pushed higher yesterday, buoyed by jobs data providing some reassurance that the government shutdown did little damage to the wider economy and by solid earnings by oil companies.
The US economy added 304,000 net new positions last month — the highest in nearly a year and almost double what economists had predicted, according to data released yesterday.
James Knightley, chief international economist at Dutch bank ING, said the report “suggests that the US economy hasn’t been adversely impacted by the government shutdown in any meaningful way.”
Yesterday’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.
The nonfarm payrolls reports was not all positive though, as the unemployment rate ticked higher to 4.0%, partly due the five-week federal government shutdown.
Moreover, wage growth nearly flatlined on a monthly basis and December’s job creation figure was revised down considerably.
Spreadex analyst Connor Campbell said “the jobs report worked in the Dow’s favour by failing to give the Fed any reason to change its dovish outlook from Wednesday.”
Earlier this week the Federal Reserve fuelled a rally on Wall Street by signalling a slowdown in its pace of American interest rate hikes this year.
After a tepid start, US markets all pushed into the green in late morning trading. Both Chevron and Exxon beat earnings expectations, helping the Dow push higher.
In Europe, both London and Paris ended the day with solid gains, while Frankfurt finished essentially flat, penalised by shares in fintech Wirecard plunging by a quarter.
London’s FTSE 100 closed 0.7% up at 7,020.22 points, Frankfurt’s DAX 30 ended 0.03% higher at 11,175.96 points and Paris’ CAC 40 gained 0.5% to close at 5,019.26 points, while the EURO STOXX 50 added 0.4% at 3,170.50 points.
China-US 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.
Separately, official data showed yesterday that eurozone inflation is moving further away from the European Central Bank’s target of 2.0% — 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 yesterday to close up 1.3%, as traders welcomed news that authorities had relaxed certain rules to make investing easier.
Pedestrians walk across Paternoster Square in front of the London Stock Exchange Group headquarters. The FTSE 100 closed 0.7% up at 7,020.22 points yesterday.
