Stock markets pushed higher on Friday after data showing the US economy continued to add jobs at a steady clip despite turbulence from a trade war with China.
A better-than-expected 128,000 net new jobs in October showed demand for workers remained resilient despite President Donald Trump’s protracted trade war with China, that has chilled investment and slowed the economy.
And gains in the prior months were revised up sharply and wages continued to climb, making the jobs picture even stronger.
On Wall Street, the broad-based S&P 500 moved into record territory shortly after trading began, while the tech-heavy Nasdaq was also not far off an all-time high.
“This barnstorming set of jobs numbers has jolted the dollar and US equities into life,” said Samuel Fuller, director of Financial Markets Online.
The jobs figures also helped dispel recent gloom about China-US trade talks that had been fuelled by a report saying Beijing officials had raised doubts about the chances of a long-term deal.
Investors had also been spooked by a speech by Secretary of State Mike Pompeo, in which he called China “truly hostile” to the US, leading Beijing to accuse the White House of “viciously” attacking it.
The flare-up comes just as the two sides put the finishing touches to a mini trade pact that is seen as the first phase of a wider agreement, with top-level phone talks due to take place later Friday.
Recent signs of progress in the long-running dispute have provided some much-needed support to equity markets in recent weeks, with most markets posting some healthy gains.
Wall Street, where the S&P 500 had hit a record high Wednesday, had turned lower on Thursday after Bloomberg News reported that Chinese officials were sceptical they would be able to reach a comprehensive long-term deal.
It said they warned they would not budge on key issues, while they were also concerned about Donald Trump’s impulsiveness and were even worried about the chances of getting the current agreement finished.
“The article proved a not-too-subtle reminder of how quickly trade war sentiment can pivot and highlighting those fears that we all knew about but were perhaps was too wrapped up (in) the phase one euphoria to recognise,” said AxiTrader’s Stephen Innes.
Also Thursday, Pompeo hit out at China’s clampdown on Hong Kong protests and its incarceration of Uighur Muslims, and said Beijing was seeking international domination. China responded by accusing the US of “arrogance and fear”.
Still, after an early sell-off, Asian traders took the developments in their stride and the mood picked up through the day to give the region’s equity markets a healthy end to the week.
Shanghai jumped one percent after a private gauge of Chinese manufacturing activity showed an improvement, soothing worries about Thursday’s official reading that pointed to further contraction in the sector.