Wall Street rose yesterday, recovering all the losses sustained after Britain’s surprise vote to leave the European Union, and stocks around the globe also jumped after data showed US job growth in June accelerated more rapidly than even the most optimistic forecasts.
The US economy added 287,000 jobs last month, according to the Labour Department, smashing the consensus forecast of 175,000. It was the highest total in eight months, wiping out expectations that the Federal Reserve might cut interest rates in the coming months.
US equity markets advanced on the news, led higher by the financial sector.
The Dow Jones industrial average rose 225.55 points, or 1.26 per cent, to 18,121.43, the S&P 500 gained 28.49 points, or 1.36 per cent, to 2,126.39 and the Nasdaq Composite added 73.35 points, or 1.5 per cent, to 4,950.16.
European stocks also surged after the data’s release, with Germany’s DAX stock index rising 2.24 per cent to lead the region’s bourses. Europe’s FTSEuroFirst 300 index of top shares rose 1.49 per cent.
MSCI’s all-country world stock index rose one per cent.
Oil prices initially rose more than one per cent after the strong jobs data and on worries about new attacks on Nigerian oil infrastructure.
Brent crude futures were up 0.8 per cent, at $46.78 per barrel. US crude futures rose 0.55 per cent to $45.39 a barrel.
Still, the upbeat US jobs report failed to significantly alter the longer-term expectation that the Federal Reserve will keep US interest rates on hold for at least a year, according to Fed funds futures prices.
Investors see a zero per cent chance the Fed will raise rates at this month’s policy meeting on July 27, and less than a 25 per cent chance of a rate hike before year-end, according to CME Group’s FedWatch tool.
Investors remain worried about the world economy following the Brexit vote and a deepening crisis in Italian banks.
The 10-year US Treasury yield rose 3/32 in price to yield 1.376 per cent.
Low expectations for a Fed rate hike also pushed the US dollar down against the yen.
While the dollar rose immediately after the jobs report, climbing to a two-week high, those gains evaporated and the dollar was last down 0.2 per cent to 100.53 yen.
The first measure of UK consumer confidence since the Brexit referendum two weeks ago showed the joint-steepest decline in morale since 1994, according to research company GfK yesterday.