Stock Markets Rally on Strong U.S. Employment Data, Dow Jones Hits Record

 

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Global stock markets surged on Friday, buoyed by encouraging U.S. employment data that reassured investors about the health of the U.S. economy.


On Wall Street, the Dow Jones rose by 0.81%, closing at a new record high. The Nasdaq gained 1.22%, while the S&P 500 saw an increase of 0.90%, marking a positive day for all major indices.


Across Europe, markets followed suit. The Paris Stock Exchange climbed 0.85%, Frankfurt gained 0.55%, and Milan advanced by 1.28%. London, meanwhile, remained stable, with only a slight dip of 0.02%. In Zurich, the SMI fell by 0.13%.


Investors responded positively to the U.S. jobs report, which “confirms that the American economy is performing well,” said Valentine Ainouz, head of rate strategy at Amundi Investment Institute, in an interview with AFP.


Steve Sosnick of Interactive Brokers echoed this sentiment, stating, “We knew these figures could move the markets, and they certainly did.”


Strong U.S. Jobs Data Exceeds Expectations


In September, the U.S. unemployment rate dipped slightly to 4.1%, down from 4.2% in the previous month. Job creation also far exceeded expectations, with 254,000 jobs added last month, compared to just 159,000 in August. Analysts had predicted only 135,000 new jobs.


“This data should calm fears and bolster the view of a resilient U.S. economy heading for a soft landing,” observed Susannah Streeter, an analyst at Hargreaves Lansdown.


Streeter also pointed out that U.S. Federal Reserve policymakers have been wary of a rapid cooling in the labor market, which prompted a significant interest rate cut last month. With these robust job numbers, expectations are growing that the Fed may opt for a more modest rate reduction in November.


“Fed Chair Jerome Powell has been cautioning for weeks that traders shouldn’t expect another large cut like the one in September, but the market didn’t fully believe him,” said Steve Sosnick. “Now, with this data, they are beginning to understand that they should take his words more seriously.”


Bond Yields Spike as Markets Soar


In response to the job data, U.S. Treasury yields surged. The 10-year bond yield jumped to 3.97%, up from 3.84% the day before, while the two-year bond yield increased to 3.92%, compared to 3.71%.


Christophe Boucher, chief investment officer at ABN AMRO Investment Solutions, noted, “Stock markets embraced the positive news, and 10-year Treasury yields spiked accordingly.”


Yen Hits Six-Week Low Amid Divergent Central Bank Policies


Meanwhile, the yen fell to its lowest level in a month and a half against the dollar on Friday. This decline was driven by contrasting policies from U.S. and Japanese central banks and a resurgence of speculative trading.


By 9:00 PM GMT, the dollar had appreciated 1.21% against the yen, reaching 148.71 yen per dollar. Earlier in the day, the yen had dropped as low as 149 yen to the dollar, its weakest point since mid-August.


The yen’s recent struggles were compounded by the release of the U.S. jobs report, which further widened the gap between the two currencies. Christophe Boucher remarked that the same report could also contribute to the euro’s decline, as the eurozone has underperformed in several key economic indicators in recent months.


Oil Prices Climb Amid Geopolitical Uncertainty


Oil prices continued to rise for the fourth consecutive session on Friday, with traders adopting a cautious stance ahead of potential geopolitical tensions over the weekend. Market uncertainty centers around possible Israeli retaliation against Iran.


Brent crude, set for December delivery, rose 0.55%, closing at $78.05 a barrel. Meanwhile, West Texas Intermediate (WTI) crude, for November delivery, climbed 0.91% to settle at $74.38 a barrel.


As geopolitical concerns remain at the forefront, traders are preparing for volatility in the energy markets heading into the next week.


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