Strong US jobs numbers gave global stock markets and the dollar a shot in the arm yesterday, providing fresh evidence for the rude health of the world’s top economy.
Ahead of Wall Street’s opening, the Labour Department reported that the US economy added 266,000 net new jobs in November, vastly higher than market expectations of around 190,000, taking the unemployment rate to 3.5 per cent.
In addition, the previous month’s numbers were revised up.
“It’s not only hard to find any weakness but hard to find anything that isn’t strong,” XTB analyst David Cheetham said of the jobs report which he called “all around stellar”.
European equity markets promptly extended morning gains, with some exceeding one percent as news of American economic strength outweighed concerns about a plunge in German October industrial output.
Wall Street posted solid gains at the opening.
The dollar, which had had a lacklustre morning, also powered ahead against its main rivals.
Oil prices were lower as OPEC members met for a second day in the hope of hammering out a fresh output cut deal.
“Some uncertainty appears to be creeping in” as to the likelihood of new, deeper cuts in oil production that had been underpinning oil prices, said analysts at Charles Schwab.
Petroleum-linked companies ConocoPhillips and Halliburton both rose more than one percent as OPEC announced it would cut production by 500,000 barrels a day more than under prior policy in a bid to boost crude prices.
On the trade front, stock markets appeared more optimistic towards China-US talks, with investors betting the two will eventually sign a partial deal, though they remain nervous as next week’s deadline for fresh tariffs draws closer.
Sentiment across trading floors has ebbed and flowed through the week as observers try to gauge the state of play in the long-running negotiations, with both sides making positive, then negative comments on the outlook.
China yesterday offered its latest olive branch, saying it would waiver tariffs on “some” imports of key US soybean and pork imports.
“It’s been rather a strange week for global equity markets,” said Michael Hewson, analyst at CMC Markets UK.
“Moving from an expectation that we could well see some movement on trade between the US and China in the next couple of weeks, to the prospect that any solution may well not happen until after the next (American) presidential election,” he said.