Strong US payrolls give stock markets a boost

AP News
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Posted: Jul 08, 2016 9:01 AM
Strong US payrolls give stock markets a boost

LONDON (AP) — Forecast-busting U.S. jobs data gave stocks a boost Friday, as investors breathed a sigh of relief that a weak reading in May wasn't a sign that the world's largest economy was slowing sharply at a time when Britain voted to leave the European Union.

KEEPING SCORE: In Europe, the FTSE 100 index of leading British shares was up 0.5 percent at 6,566 while Germany's DAX rose 1.3 percent to 9,545. The CAC-40 in France was 0.9 percent higher at 4,154. Wall Street was poised for a solid open, with Dow futures and the broader S&P futures up 0.6 percent.

US JOBS RELIEF: Employers shook off two months of weak hiring by adding 287,000 jobs in June, a robust pace that suggests a resilient U.S. economy recovering from a slump early in the year. The hiring spurt marked a sharp improvement from May's dismal showing, when just 11,000 jobs were added. However, the unemployment rate rose in June to 4.9 percent from 4.7 percent as more Americans began seeking jobs — a sign of confidence — and some didn't find them. The broadly positive report suggests the U.S. economy was improving before the British vote to leave the EU, so-called Brexit. Despite the positive jobs figure, traders don't think it will alter the assumption in financial markets that the Federal Reserve won't be raising interest rates anytime soon.

ANALYST TAKE: "It has been a month of huge shocks for the global economy, but what you can hear now is a massive sigh of relief from the markets," said Dennis de Jong, managing director of UFX.com. "Although the Federal Reserve will take encouragement from this vital data, they simply aren't in a position to consider a rate hike at the moment. There is still huge uncertainty around the world, but the U.S. economy has at least taken a step in the right direction here."

BREXIT IMPACT: British shares were not faring as well as other markets amid mounting evidence that the vote to leave the EU is taking a toll on the economy. On Friday, market research firm GfK found that consumer confidence took a dive in the wake of the June 23 decision to leave the EU. In a one-off survey to gauge the impact of the referendum result, it said its core index of consumer confidence dropped by 8 points to minus 9 in July, its lowest level since December 2013.

ASIA'S DAY: Japan's Nikkei 225 closed 1.1 percent down at 15,106.98. Hong Kong's Hang Seng index shed 0.7 percent at 20,564.17. China's Shanghai Compose index fell nearly 1 percent to 2,988.09. Australia's S&P ASX 200 edged up 0.1 percent at 5,230.50. South Korea's KOSPI lost 0.6 percent at 1953.10. Southeast Asian markets were mixed.

OIL: The strong U.S. payrolls figures helped shore up oil prices, too. Benchmark U.S. crude rose 35 cents to $45.50 while Brent crude, used to price international oils, gained 34 cents at $46.74.

CURRENCIES: The dollar was solid as well, up 0.2 percent at 100.96 yen while the euro was down 0.4 percent at $1.1012.