Stocks and the dollar jumped yesterday as investors cheered strong US employment data, which bolstered expectations of an acceleration in economic growth and raised the probability of a Federal Reserve interest rate hike this year.

Forecast-beating US non-farm payrolls numbers, coming a day after the launch of a new Bank of England monetary easing package, sent US Treasury yields higher.

MSCI’s world stocks index, which tracks shares in 45 countries, was up 0.41 per cent, on pace for a second day of gains.

Non-farm payrolls rose by 255,000 jobs in July as hiring increased broadly after an upwardly revised 292,000 surge in June, the US Labour Department said. Economists had expected a rise of 180,000.

After the jobs data, futures contracts showed traders still saw less than even odds of a rate hike this year, but close to even odds of such a move by early 2017. Ahead of the employment report, traders saw little chance of a rate increase until well into next year.

The S&P 500 hit a record intra-day high with financials, which benefit from rising interest rates, leading gains.

The Dow Jones industrial average rose 143.58 points, or 0.78 per cent, to 18,495.63, the S&P 500 gained 14.14 points, or 0.65 per cent, to 2,178.39 and the Nasdaq Composite added 51.88 points, or one per cent, to 5,218.13.

The S&P financial sector was up 1.5 per cent.

Europe’s broad FTSEurofirst 300 index was up 0.73 per cent at 1,341.37, helped by solid earnings from companies including cement making group LafargeHolcim.

The dollar rallied across the board, hitting one-week peaks against the euro and the Swiss franc and turning positive versus the yen after the jobs data.

The dollar index, which tracks the greenback against six major currencies, was up 0.65 per cent to 96.382.

The rallying dollar dragged commodities, including gold and oil, lower.

Gold is highly sensitive to rising US interest rates, which lift the opportunity cost of holding the non-yielding asset while boosting the dollar, in which it is priced.

Spot gold prices were down 1.7 per cent to $1,337.70 an ounce, on pace for the worst drop in more than three weeks.

Oil’s two-day rally, fueled by short-covering and bargain-hunting, fizzled as investors focused on oversupplies.

Brent crude was down 1.42 per cent at $43.66 a barrel, while US crude was down 1.69 per cent at $41.23.