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Global stocks, U.S. dollar end lifted after labor pickup, oil gains

EconomyNov 05, 2021 06:11PM ET
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2/2 © Reuters. FILE PHOTO: A pedestrian looks at various stock prices outside a brokerage in Tokyo, Japan, February 26, 2016. Asian shares made guarded gains on Friday as a gathering of world finance leaders provided a welter of reassuring comments, but little in the wa 2/2

By Katanga Johnson

WASHINGTON (Reuters) -World equities markets reached new heights on Friday after a session-long climb, booking a week of solid gains following a strong U.S. jobs report.

The dollar index, which had hit a one-year peak earlier in the session, slightly retreated in late trading as risk appetite improved and stocks rallied.

The moves came after U.S. Labor Department jobs data rebounded in a reassuring sign for investors who had worried for months about how stocks would fare once the Federal Reserve began rolling back the 2020 COVID-19 pandemic-fueled stimulus.

Nonfarm payrolls increased by 531,000 jobs last month as the surge in COVID-19 infections over the summer subsided, offering more evidence that U.S. economic activity was regaining momentum early in the fourth quarter.

Global stocks have seen a series of records in recent weeks, bolstered by blockbuster earnings reports from the biggest U.S. listed companies.

The dollar index, which measures the greenback against a basket of six rivals, rose as high as 94.634 after the jobs report, its highest level since Sept. 25, 2020. The currency's strengthening to its highest level in more than a year offers the Fed more evidence that the economic recovery has regained momentum.

"If these numbers continue at this pace, we could probably see full employment at the end of the first quarter," said Peter Cardillo, chief market economist at Spartan Securities.

Crude prices rose more than 2% on Friday on renewed supply concerns after OPEC+ producers rebuffed a U.S. call to accelerate output increases even as demand nears pre-pandemic levels.

Brent crude was up $2.14, or 2.7%, at $82.68 per barrel. West Texas Intermediate crude (WTI) gained $2.47, or 3% to $81.28.

"Markets know that the release of strategic reserves can only have a temporary bearish effect on prompt prices and is not a lasting solution for an imbalance between supply and demand," Rystad Energy head of oil markets Bjornar Tonhaugen said in a note.

The Dow Jones Industrial Average rose 0.56%, while the S&P 500 gained 0.37%. The Nasdaq Composite added 0.2%. The pan-European STOXX 600 index rose 0.05%.

MSCI's gauge of stocks across the globe gained 0.17%.

Friday's advances came even after the Federal Reserve announced on Wednesday that it would begin tapering its massive asset purchase program, though Fed Chair Jerome Powell said he was in no rush to hike borrowing costs.

"Even though it transpired as expected, it is a significant milestone. The direction of travel is now clearly towards policy normalization, though the Fed emphasized that tapering is not tightening," said Stefan Hofer, chief investment strategist for LGT in Asia Pacific. "It was really expert communication and very well handled."

U.S. Treasury yields tumbled and the curve flattened in choppy trading on Friday amid uncertainty

The benchmark 10-year yield, which fell to its lowest level since Sept. 24 at 1.436% and marked its biggest downward move since July 19, was last 7.4 basis points lower at 1.4496%.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan was 0.29% lower, while Japan's Nikkei lost 0.61%.

Hong Kong had weighed on the regional index, falling 1.25% as index heavyweight and rate-sensitive HSBC fell 3.6% following a dovish call from the Bank of England (BoE) and anxiety over property stocks.

Trading in shares of Chinese developer Kaisa Group Holdings Ltd was suspended a day after the company said a subsidiary had missed a payment on a wealth-management product, the latest sign of a deepening liquidity crisis in the Chinese property sector.

An index tracking Hong Kong-listed mainland Chinese developers slipped 2.8%, and an onshore China property index lost 2%.

More broadly, Shanghai shares lost 1% and Chinese blue chips slipped 0.5%.

While investors were happy with the Fed's communications, some felt that they had been misdirected by policymakers at the BoE.

The Bank of England's decision on Thursday not to lift rock-bottom benchmark rates proved the biggest shock for markets and pushed sterling to its biggest one-day fall in more than 18 months by as much as 1.6% on the day.

Sterling fell as much as 0.5% on Friday, hitting a fresh one-month low of $1.34250. It was last down 0.07%.

Germany's 10-year bond yield looked set for its biggest weekly drop since June last year, down 15 basis points as central banks left policy rates unchanged.

Spot gold added 1.4% to $1,816.73 an ounce.

Global stocks, U.S. dollar end lifted after labor pickup, oil gains
 

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Comments (9)
me ish
me ish Nov 05, 2021 1:54PM ET
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Remember, Good economic news is bad for the stock market - quicker tapering and quicker rises in interest rates - market will wake up to this very shortly
Chris Sundo
Chris Sundo Nov 05, 2021 11:25AM ET
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Let's pull back here into Tuesday morning, for Tuesday as a turnaround Tuesday, and then rally into Veterans Day and beyond
Chris Sundo
Chris Sundo Nov 05, 2021 11:22AM ET
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phoney jobs number. -- We need a pullback here to rally strongly into Veterans Day, folks. -- Let's give our veterans a Profit-taking here soon and then a rebuy next Wednesday, please ;)
Fozzy Ferdinand
Fozzinand Nov 05, 2021 9:55AM ET
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The participation rate didn’t budge. These were people transferring jobs and falling off the unemployment rosters. Employment hasn’t been this low since the 70s.
Richard Saunders
Richard Saunders Nov 05, 2021 4:55AM ET
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Ah yes, good ol China. Nothing like a black swan event to start the crash. I'm ready and waiting!
Rodney Dangerfield
Rodney Dangerfield Nov 05, 2021 2:40AM ET
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the USD has lost 98% of its value since 1971
ndikumana Elias
ndikumana Elias Nov 05, 2021 1:34AM ET
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Spot gold is non interest bearing, except for mining stocks with a dividend. Let the SPOT PRICE RISE YOU CROOKS!!
ron king
ron king Nov 05, 2021 12:45AM ET
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are are they now? do tell exactly where you came upon this fud? these articles are laughable at best.
Cash Fox
Cash Fox Nov 05, 2021 12:45AM ET
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That's something I wonder also very often, what they are writing about....
Jokers R Us
Jokers R Us Nov 05, 2021 12:13AM ET
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Spot gold is non interest bearing, except for mining stocks with a dividend. Let the SPOT PRICE RISE YOU CROOKS!!
 
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