Stocks, euro jump on US jobs, Europe hopes
UPDATED @ 11:06:06 PM 07-10-2011
NEW YORK, Oct 7 — World stocks and the euro rallied today after stronger-than-expected US employment data eased fears of another global recession.
Hopes for a stronger policy response to the euro zone debt crisis also supported the European single currency, which rose against the dollar for the fourth consecutive session.
Prices of US government bonds slid after the US Labour Department said nonfarm payrolls rose by 103,000, above expectations for a 60,000 rise. Jobs gains for prior months were also revised higher.
“It’s a breath of fresh air and should allow the risk recovery we’ve had this week to continue,” said Brian Dolan, chief strategist at Forex.com in New Jersey.
“All in all, it suggests a continuation of the risk recovery and that the US will outperform other developed economies,” he added.
Markets should remain volatile, however, while European policymakers debate how to shield banks in the event of a Greek debt default. In the run-up to crucial summit talks on Sunday, Germany and France still disagreed on measures to strengthen the banking sector, diplomats said.
Key Wall Street indexes traded higher, although the Nasdaq seesawed between positive and negative territory.
The Dow Jones industrial average rose 76.10 points, or 0.68 per cent, to 11,199.43, while the Standard & Poor’s 500 Index climbed 2.17 points, or 0.19 per cent, to 1,167.14. The Nasdaq Composite Index was down 0.86 points, or 0.03 per cent, at 2,505.96.
World stocks measured by the MSCI All-Country World index gained 1.1 per cent.
US crude oil prices rose 0.68 per cent to US$83.15 (RM262.69) per barrel.
Earlier, German data showed industry output in the European giant dropping one per cent in August, a smaller-than-expected decline.
The euro, which has fallen back from a 2011 peak near US$1.50 in May, rose 0.47 per cent to US$1.3494.
Hopes of a more robust policy response to the two-year-old euro zone sovereign debt crisis rose this week after euro zone policy makers pledged to present a plan for a coordinated recapitalisation of the region’s banks.
Aggressive liquidity measures that the European Central Bank (ECB) unveiled yesterday to help lenders facing straitened wholesale funding conditions further emboldened risk appetite.
Safe-haven investments such as US Treasury bonds sold off as a result. Thirty-year Treasuries led losses, falling nearly two points in price to yield 3.0438 percent. — Reuters