Jobs Surge Sends Stocks Higher
European and U.S. stock markets advanced Friday on data showing a surge in new job creation in the United States last month, while U.S. bank stocks jumped on moves by President Donald Trump to roll back financial regulations.
While the U.S. economy added 227,000 net new nonfarm jobs in January, the biggest jump since September, analysts called the January jobs data mixed overall as the unemployment rate crept up by a tenth of a percentage point to 4.8 percent and wage growth stalled.
While the job creation rate was considerably higher than the average in recent months, "the bad news was that wage growth was virtually non-existent and the unemployment rate was higher than thought," said Neil Wilson, senior market adviser at ETX Capital.
"All in all, it was a mixed bag and the rather whippy dollar price action reflected the uncertainty with which the markets are treating this," he said.
The dollar quickly lost gains that it had made against the euro before the announcement of the jobs report.
"It’s a report that will do nothing to make the Fed raise rates quicker, despite the strong-than-expected headline number" of jobs created, said Wilson.
The U.S. Federal Reserve on Wednesday kept its benchmark interest rate unchanged and said it still expects to need only gradual rate increases.
The Fed last month adopted only its second interest rate hike in a decade -- putting the target range for the overnight lending rate at 0.5 percent to 0.75 percent. And it indicated it expected to implement three interest rate increases this year.
"January’s employment report won’t convince the Fed to hike rates again just yet," said U.S. economist Andrew Hunter at Capital Economics. "We still expect the next rate hike to come in June."
Higher interest rates would support a stronger dollar as overseas investors would want to buy U.S. bonds.
- Bank shareholder 'glee' -
However, investors in stocks were happy with jobs numbers which largely confirm the health of the U.S. economy, which has seen a slow but steady recovery from the 2008 financial crisis.
U.S. stocks were trading higher approaching midday, with banking stocks leading the way on an initiative by Trump to loosen banking regulations tightened after the financial crisis.
The initiative aims to scrap parts of the so-called Dodd-Frank law, which backers say is aimed at curbing the actions of the finance sector that led to the "Great Recession," but which critics claim creates red tape that stifles the industry.
Shares in JPMorgan Chase were up 2.4 percent and Bank of America 2.2 percent.
"Financial firms were clear cut leaders," said market analyst Jasper Lawler at London Capital Group. "There was observable shareholder glee that an era of ever-expanding regulation could be coming to an end under Donald Trump."
Meanwhile in Europe, London's benchmark FTSE 100 index ended the day with a gain of 0.7 percent,
In the eurozone, Frankfurt's DAX 30 grew 0.2 percent and the Paris CAC 40 climbed 0.7 percent.
Asian traders moved cautiously ahead of the US jobs figures, at the end of a volatile week and following another tepid lead from Wall Street.
- Key figures around 1630 GMT -
London - FTSE 100: UP 0.7 percent at 7,188.30 points (close)
Frankfurt - DAX 30: UP 0.2 percent at 11,651.49 (close)
Paris - CAC 40: UP 0.7 percent at 4,825.42 (close)
EURO STOXX 50: UP 0.7 percent at 3,277.38
New York - Dow: UP 0.8 percent at 20,052.72
New York - S&P 500: UP 0.7 percent at 2,295.97
New York - Nasdaq: UP 0.4 percent at 5,655.75
Tokyo - Nikkei 225: FLAT at 18,918.20 (close)
Hong Kong - Hang Seng: DOWN 0.2 percent at 23,129.21 (close)
Shanghai - Composite: DOWN 0.6 percent at 3,140.17 (close)
Euro/dollar: UP at $1.0781 from $1.0760
Pound/dollar: DOWN at $1.2503 from $1.2535
Dollar/yen: DOWN at 112.48 yen from 112.79 yen
Oil - West Texas Intermediate: UP 39 cents at $53.93 per barrel
Oil - Brent North Sea: UP 40 cents at $56.96
Source: Agence France Presse
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