The dollar rose and global equity markets advanced yesterday, with stocks setting record highs on a surge in US jobs growth that provided a clear sign the economy is growing faster than expected, perhaps as much as four per cent in the second quarter.
The Dow industrials passed the 17,000 milestone and the benchmark S&P 500 rose to within one per cent of piercing 2,000 after the US unemployment rate fell to its lowest level in almost six years. Both indexes recorded both record intraday and closing highs.
MSCI’s all-country world index, which covers about 85 per cent of potential global stock investments, rose 0.39 per cent, also to a record high. European shares climbed to within two points of multi-year highs.
Jacob Oubina, senior US economist at RBC Capital Markets in New York, called the Labor Department report “extremely bullish.” Nonfarm payrolls increased by 288,000 jobs in June and the unemployment rate fell to 6.1 per cent.
US employment has grown at more than 200,000 jobs in each of the last five months, the first such string of growth since the late 1990s.
“You’ll see the market continue to grind up, but not leap higher,” said Phil Orlando, chief equity market strategist at Federated Investors in New York.
“We’re convinced that we’ll see 2,100 on the S&P 500 by the end of the year but we’re pushing up to 2,000 right now, so you don’t have the huge valuation imbalance and that’s why you’re not going to see a huge jump here,” Orlando said.
The pan-European FTSEurofirst 300 index closed up 0.95 per cent at 1,398.24, just shy of the six-and-a-half-year high of 1,399.62 points reached in late June.
The Dow Jones industrial average closed up 92.02 points or 0.54 per cent, to 17,068.26.
The S&P 500 gained 10.82 points, or 0.55 per cent, to 1,985.44, and the Nasdaq Composite added 28.191 points, or 0.63 per cent, to 4,485.925.
US stock markets closed early, at 1pm, ahead of today’s US Independence Day holiday in thin trade.
The euro dipped to one-week troughs versus the dollar as European Central Bank President Mario Draghi affirmed the ECB’s low interest-rate policy, citing persistent downside risks to the eurozone economy.
The dollar rose 0.43 percent against the yen, at 102.21 yen, while the dollar index rose 0.32 per cent to 80.214.
The euro traded 0.37 per cent lower at $1.3608.
US benchmark Treasuries yields hit two-month highs. The 10-year Treasury note fell 4/32 in price to yield 2.6429 per cent, after earlier rising to 2.692 per cent.
Gold slipped as the dollar extended early gains after the US nonfarm payrolls report.
Gold futures for August delivery dropped 0.78 per cent to $1,320.5 an ounce.
Brent crude futures fell below $111 a barrel as supply fears began to ease after Libya declared an end to an oil crisis that has slashed exports from the member of the Organization of Petroleum Exporting Countries.