Global shares surge on strong US jobs report
New York, March 9, 2013
World equity markets rallied and the US dollar strengthened on Friday after an unexpectedly sharp jump in US employment in February reinforced the view that the world's biggest economy is gaining traction.
The Dow Jones industrial average posted its fourth consecutive intraday and closing record highs, while European shares and a gauge of global equity markets rose to their highest levels in more than 4-1/2 years.
US equities ended the session in a surge that put the benchmark S&P 500 index less than 1 per cent away from a record closing high. Advancing stocks outnumbered declines by more than 2 to 1 on both the New York Stock Exchange and Nasdaq.
The Dow is up almost 10 percent so far this year, while the S&P has gained almost 9 per cent.
The dollar touched a 3-1/2-year high against the yen and a three-month peak against the euro, but US Treasuries sank on the payrolls report, which showed the US unemployment rate fell to a four-year low of 7.7 per cent last month.
Nonfarm payrolls added 236,000 jobs in February, the Labor Department said, handily beating economists' expectations of a gain of 160,000.
"We're seeing growing inflows coming into the asset class. This is sort of a sweet spot, with improving US job data while central banks around the world are pledging to keep printing money," said David Thebault, head of quantitative sales trading at Global Equities in Paris.
Adding to the stream of encouraging data was a 1.2 per cent gain in US wholesale inventories in January to $504.4 billion - the fastest pace of growth since December 2011. The strong reading followed a revised 0.1 per cent rise in December 2012.
JPMorgan Chase, Bank of America and Goldman Sachs & Company weighed on the rally, as banks had advanced recently ahead of the Federal Reserve's stress test results that showed they had enough capital to withstand a severe downturn.
Despite the strong market reaction, last month's labor report showed a job market that continues to move sideways at a frustratingly slow trend for the Fed, said Ellen Zentner, senior US economist at Nomura Securities in New York.
The length of time people are unemployed deteriorated, the number of discouraged workers increased, voluntary job labor fell and the labor force participation rate declined, all items Fed policymakers pay close attention to, she said.
"This is not a report that is going to inspire any kind of change in monetary policy, it is certainly not going to inspire any kind of discussion around this stellar job report that makes them decide to end QE earlier than expected," Zentner said, referring to the Fed's asset-buying program.-Reuters