An April rebound in US jobs growth boosted Wall Street and supported the dollar yesterday, while a surprise Conservative victory cast away fears of a hung British Parliament and sparked a rally in sterling and European stock markets.
Global bond markets recovered for a second day, focusing on weak aspects of the latest US jobs report, which may cause the Federal Reserve to be even more cautious towards ending its near- zero interest rate policy later this year.
Oil prices fell, erasing their early gains tied to data that showed a strong rise Chinese crude imports, and gold edged higher following two days of losses as lower bond yields revived some appeal of holding the precious metal.
The April US jobs data showed a solid 223,000 increase after a disappointing March, when hiring slowed sharply due partly to tough weather. The unemployment rate dropped to 5.4 per cent in April, near a seven-year low.
Analysts and traders reckoned the April jobs figures put the Fed on track for a rate increase later this year and said it may take years before bringing rates toward a forecast 3.75 per cent.
That Fed outlook sparked a rally in US Treasuries, sending benchmark yields further below the year’s peaks set earlier this week in a dramatic global bond market rout.
The 10-year US Treasuries note was up 18/32 in price, the yield at 2.1191 per cent, while the German 10-year Bund yield was last at 0.543 per cent, down five basis points from late on Thursday.
In late morning US trading, the Dow Jones industrial average was up 261.15 points, or 1.46 per cent, at 18,185.21. The Standard & Poor’s 500 Index was up 27.22 points, or 1.30 per cent, at 2,115.22. The Nasdaq Composite Index was up 63.97 points, or 1.29 per cent, at 5,009.52.
European bourses rallied after the UK’s Conservative Party was set to govern Britain for another five years, erasing worries of a hung parliament.
The FTSEurofirst 300 index of top pan-European shares jumped 2.7 per cent to 1,589.72 with Britain’s FTSE 100 up 2.0 per cent.
Earlier, Tokyo’s Nikkei closed up 0.45 per cent.
The MSCI world equity index, which tracks shares in 45 nations, rose 1.35 per cent, to 439.13.
In the currency market, the pound reached a 10-week high against the dollar following the surprise Conservatives win. It was last up one per cent at $1.5396.
The greenback fared better against other major currencies. The dollar index rose 0.11 per cent to 94.738 in the wake of the US jobs data and disappointing German trade and industrial output figures.
Brent crude was last down 57 cents, or 0.8 per cent, at $64.99 a barrel. US crude was last up 13 cents, or 0.2 per cent, at $59.07 per barrel.
Spot gold prices rose $0.85 or 0.07 per cent, to $1,185.15 an ounce.