BCN-03,04 Global stocks soar on dovish Fed, strong US jobs data

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BCN-03

WORLD-MARKETS

Global stocks soar on dovish Fed, strong US jobs data

NEW YORK, Jan 5, 2019 (BSS/AFP) – Global stocks shot higher on Friday
following a strong US jobs report and dovish comments from Federal Reserve
Chair Jerome Powell on the prospects for higher interest rates.

Those back-to-back market-friendly developments helped US and European
stock bourses surge higher and set aside for now nervousness over trade wars,
a US government shutdown and a slowing economy that have pressured stocks for
most of the last month.

“A solid set of job numbers and some comfortable words from the chairman
of the Federal Reserve have been just the ticket to get markets into bullish
mode,” said Chris Beauchamp, chief market analyst at online trading platform
IG.

The Dow finished up 3.3 percent, or nearly 750 points, to end the week at
23,433.16, more than making up for the 2.8 percent slide on Thursday amid
worries over slowing growth.

Bourses in Paris, Frankfurt and London all surged at least two percent,
also boosted in part by the US momentum.

Earlier, Japan’s Nikkei had slumped 2.3 percent, due in part due to a
strengthening yen, which advanced further on the US currency following
Powell’s dovish commentary.

The losses in the Japan also followed Thursday’s grim Wall Street session,
which saw major indices end down more than two percent after Apple slashed
its revenue forecast on weak demand in China and a US report showed
manufacturing activity slumping to a two-year low.

– Dovish tone –

Employment data showed the US added 312,000 jobs in December, much above
analyst expectations, strengthening the case of those who have argued that
markets have overreacted to signs that US growth may have peaked.

Stocks rallied further after Fed Chair Jerome Powell told a gathering of
economists that the US central bank had no “pre-set” plan for interest rates
and was carefully monitoring economic conditions.

“Markets are expressing concerns about global growth in particular and
trade negotiations,” Powell said.

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“We’re listening with — sensitively to the message that markets are
sending and we’ll be taking those downside risks into account as we make
policy going forward.”

Powell “said exactly what the markets wanted to hear,” said Gregori
Volokhine of Meeschaert Financial Services. “He will adapt to economic
conditions and could provide support if it’s needed.”

But Jason Schenker of Prestige Economics suggested the Fed could still
take a hard line.

“Despite this dovish tone, we are skeptical,” Schenker said in a note.
“The Fed has willfully ignored trade and interest rate risks while talking a
hawkish game.”

Many analysts are girding for a rocky year for markets, owing to the US-
China trade war and other unresolved matters, including a government shutdown
fight in Washington that President Donald Trump warned Friday could last
years as he battles for funding for a border wall with Mexico.

Stocks could be further pressured when companies report quarterly
earnings later this month, according to DataTrek Research Co-Founder Nicholas
Colas.

“The upcoming earnings season will likely see managements reset 2019
earnings expectations to something close to flat versus 2018,” said Colas in
note on Friday, adding that stocks could push higher in the year even if
January is a month of losses

Analysts have also warned that increased gloom in financial and business
circles could have a self-fulfilling nature.

A report Friday from JPMorgan Chase said trends in financial markets
suggest investors have priced in around a 60 percent chance of a recession,
while economists have put the odds of a recession within one year at around
40 percent.

– Key figures around 2200 GMT –

New York – Dow: UP 3.3 percent at 23,433.16 (close)

New York – S&P 500: UP 3.4 percent at 2,531.94 (close)

New York – Nasdaq: UP 4.3 percent at 6,738.86 (close)

London – FTSE 100: UP 2.2 percent at 6,838.24 (close)

Frankfurt – DAX 30: UP 3.4 percent at 10,767.69 (close)

Paris – CAC 40: UP 2.7 percent at 4,737.12 (close)

EURO STOXX 50: UP 3.0 percent at 3,041.85 (close)

Tokyo – Nikkei 225: DOWN 2.3 percent at 19,561.96 (close)

Hong Kong – Hang Seng: UP 2.2 percent at 25,626.03 (close)

Shanghai – Composite: UP 2.1 percent at 2,514.87 (close)

Dollar/yen: UP at 108.44 yen from 107.68 yen at 2200 GMT Thursday

Euro/dollar: UP at $1.1398 from $1.1394

Pound/dollar: UP at $1.2730 from $1.2628

Oil – Brent Crude: UP $1.11 at $57.06 per barrel

Oil – West Texas Intermediate: UP 87 cents at $47.96 per barrel

BSS/AFP/HR/0930