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Stock markets cheer booming US jobs market
LONDON, May 4, 2019 (BSS/AFP) – Stock markets on both sides of the
Atlantic rose on Friday, hailing US jobs data that confounded expectations,
showing the lowest unemployment rate in half a century.
Before the opening bell on Wall Street, the US government reported another
giant month of job creation in April, with strong hiring in the vast services
sector and unemployment falling to a level not seen since December 1969, when
Richard Nixon was in the White House.
“No signs of a slowdown here,” said James Knightley, Chief International
Economist at ING.
Crucially, investors will no longer need to rely on hopes for Federal
Reserve rate cuts to underpin their optimism, he said.
“The market is pricing Fed rate cuts, but we really don’t see the need,”
Knightley said.
– ‘Goldilocks’ –
“Neither too hot nor too cold,” said Stephen Innes, Head of Trading at
SPI, calling the US data “another Goldilocks” payroll report.
“The US economy remains in the sweet spot with extremely robust labour
markets driving strong consumption growth but apparently without stoking the
inflationary fires,” he said.
US stocks advanced in reaction, while European equities were higher at the
close.
The London market shrugged off news that Britain’s two main parties
faltered badly in UK local elections, as voters vented their frustration with
the prolonged Brexit deadlock.
“London stocks were largely unperturbed by the results as clearly bigger
decisions await between now and (the) October” Brexit deadline, noted Fiona
Cincotta, senior market analyst at City Index trading group.
The US jobs figures came after the head of the Federal Reserve
disappointed markets on Wednesday by saying that recent weak inflation was
“transitory”, denting hopes the US central bank would consider an interest
rate cut this year.
The dollar rose at first as this scenario seemed to be borne out by the
jobs data, but then lost ground against the euro in late European business.
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– US-China trade concerns –
On the trade front, there was some unease after a report in Chinese media
speculated that negotiators from China and the US had hit an impasse in the
trade negotiations, citing the fact there were few details from their most
recent talks in Beijing this week.
“Whilst these are just initial reports, clearly anything that suggests the
US and China won’t agree a deal will rattle investors,” said Neil Wilson,
chief market analyst for Markets.com.
However, the National Australia Bank pointed out that the comments
contradicted reports by Politico and CNBC that suggested a deal could come as
soon as next Friday.
US Vice President Mike Pence said Friday that President Donald Trump
remained “very hopeful” about the talks.
In commodities trading on Friday, oil prices rebounded after main
contracts Brent and WTI tumbled from touching six-month highs last week.
Oil had been rallying in recent weeks on output cuts by producer nations,
Iran supply concerns, unrest in fellow OPEC members Libya and Venezuela and
hopes for the China-US trade talks — before heavy profit-taking took hold.
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