Receive free Markets updates
We’ll send you a myFT Daily Digest email rounding up the latest Markets news every morning.
Global stocks rose on Friday after closely watched US data showed jobs growth was weaker than expected, bolstering investors’ hopes that the Federal Reserve has finished raising interest rates.
Wall Street’s S&P 500 rose 0.6 per cent, on course to end a three-session losing streak, while the tech-focused Nasdaq Composite added 0.9 per cent.
In Europe, the region-wide Stoxx Europe 600 index ended the day 0.3 per cent higher, while France’s Cac 40 was up 0.8 per cent and Germany’s Dax rose 0.4 per cent.
The moves came after figures showed the US economy added 187,000 jobs in July, fewer than the 200,000 forecast of economists polled by Reuters.
The US dollar, which tends to weaken when investors expect lower interest rates, lost 0.8 per cent against a basket of six peer currencies.
Yields on the policy-sensitive two-year US Treasury declined 0.07 percentage points to 4.82 per cent after the data release. Yields on the benchmark 10-year note fell 0.12 percentage points to 4.08 per cent. Bond yields fall as prices rise.
“It does seem that the labour market is cooling, albeit slowly, which is just what the Fed will want to see,” said Neil Birrell, chief investment officer at Premier Miton Investors. “Overall, this increases the chances of rates being at their peak and the Fed pulling off the trick of getting inflation under control whilst keeping the economy strong.”
Long-term Treasuries had come under pressure earlier in the week, with yields hitting a nine-month high on Thursday, after the Treasury lifted its issuance target for the coming quarter.
The jobs report also showed that average hourly earnings increased 4.4 per cent year on year in July, unchanged from the previous month and slightly above analysts’ expectations.
The US central bank had last raised its benchmark federal funds rate to a target range between 5 per cent and 5.25 per cent, signalling that future tightening will be contingent on data.
The overwhelming majority of investors expect Fed policymakers will keep rates steady at their next meeting in September, according to data compiled by Refinitiv and based on interest rate derivatives prices.
Markets also reacted to corporate earnings from Amazon, Apple and Airbnb after the close on Thursday.
Amazon gained 10.8 per cent, but Apple lost 2.9 per cent, as investors grew cautious after the company said its total revenues declined for the third successive quarter. The two companies account for almost 20 per cent of the Nasdaq’s value.
In Asia, China’s benchmark CSI 300 gained 0.4 per cent and Hong Kong’s Hang Seng rose 0.6 per cent after the People’s Bank of China pledged to divert financial resources to the country’s struggling private sector. Japan’s Topix rose 0.3 per cent.
Read the full article here
