Bond prices jumped yesterday after a weak US employment report increased worry about slowing global growth, while US and European equities were able to rebound from earlier declines and rise modestly.
The economy created 142,000 jobs in September, well short of the 203,000 forecast, and August numbers were revised sharply lower to show only 136,000 jobs, the US Labor Department said.
Bond prices jumped, with benchmark US Treasury yields falling to their lowest level in slightly over 5 months. The 10-year US Treasury note was last up 12/32 to yield 2.0016 per cent.
US stocks managed to rebound from sharp declines, buoyed by gains in the beaten down energy and materials sector.
Years of cheap central bank cash after the 2007-2008 financial crisis have supported asset prices, but recent signs of a slowdown in global economic growth, and the Fed's decision last month to postpone raising interest rates, have spooked investors betting on a return to more normal policy.
The weak jobs report likely pushes out the timeline for the Fed to raise interest rates for the first time in nearly a decade. Fed funds futures implied traders see nearly no chance the US central bank would end its near-zero rate policy in October, according to CME Group's FedWatch program, with a hike likely to occur in March 2016.
The Dow Jones industrial average rose 69.05 points, or 0.42 per cent, to 16,341.06, the S&P 500 gained 8.12 points, or 0.42 per cent, to 1,931.94 and the Nasdaq Composite added 24.63 points, or 0.53 per cent, to 4,651.71.
The pan-European FTSEurofirst 300 also erased early gains, buoyed by utility stocks, and closed down 0.4 per cent. MSCI's all-country world stock index rose 0.4 per cent.
The US dollar index of major currencies which had advanced before the employment report was down 0.4 per cent to 95.839 after hitting a two-week low of 95.218.
In contrast, gold prices reversed course and climbed more than 2.0 percent to last trade at $1,139.06 an ounce, on track for the biggest percentage gain in a week. They had fallen to a two-week low before the report. Silver advanced 5 per cent, its biggest percentage gain since December, to $15.18 an ounce.
Concerns about US monetary policy and a slowdown in emerging markets led by China have hit commodities markets and related stocks, like Glencore, this week and ramped up volatility.
After earlier declines, copper also moved higher and was up 1.1 percent to $5,150 per tonne, as the increased possibility the Fed will hold off on a rate hike tempered growth worries.
US crude gained 1.7 per cent to $45.48 per barrel. Brent advanced 0.9 per cent to $48.10 after a report showing the fifth weekly decline in the US oil rig count added to signs of falling production.