Weak US jobs data a boon for stocks

Equities pushed higher on Friday after weak US jobs data reduced the likelihood of a quick tightening of US monetary policy.

The US economy added just 210,000 jobs last month, government data showed. At less than half the increase analysts were expecting, the data raised questions about the health of the economic recovery.

“Aggressive tapering is out of the window,” said Naeem Aslam, chief market analyst at brokerage AvaTrade.

“US equity futures have also moved higher on the back of this data as traders are feeling a little more comfortable,” he added.

However the bump faded and when futures trading on Wall Street opened, the Dow moved 0.3 percent higher.

European stock indices turned to gains following the data release, rising 0.5 percent when Wall Street opened, and Asian stocks rose earlier in the day.

Investors were eagerly awaiting the November non-farms payroll data for its potential impact on the US Federal Reserve.

Surging inflation has put pressure on monetary policymakers to remove, or ‘taper’ economic stimulus measures and raise interest rates.

Fed boss Jerome Powell suggested earlier this week the bank would likely speed up the phasing out of its bond-buying stimulus programme and then focus on lifting borrowing costs.

The weak jobs data might give Fed policymakers pause, however, as higher interest rates would undermine what appears to be a weakening recovery.

Other analysts doubt the Fed will be swayed as Powell laid out near-term monetary policy in his testimony to lawmakers earlier this week.

“Earlier this week the Fed Chair Powell effectively admitted the central bank’s “transitory” view of inflation was wrong and that they could wrap up bond purchases in the next few months, despite the threat of Omicron variant,” said analyst Fawad Razaqzada at ThinkMarkets.

Global markets have seen wild swings since Omicron hit the headlines last week, prompting some governments to reimpose containment measures that could dampen economic activity.

“Investors are clearly still anxious about the Omicron variant, despite anecdotal evidence suggesting symptoms are less severe” than first thought, said Craig Erlam, analyst at Oanda trading group.

“Heading into the weekend, when we could get more information on the new strain, it’s natural that we’re seeing more caution.”

Doctors in South Africa on Friday revealed there had been a spike in hospitalisations among young children after Omicron swept through the country but stressed it was too early to know if they were particularly susceptible.

In the week since South Africa alerted the world of the new Covid variant, infections have spread faster than in the country’s three previous waves.

“Despite a ramp-up in cases and hospitalisations in South Africa, markets appear to be hopeful that this latest variant will have mild enough effects to avoid another bout of global lockdowns,” said IG analyst Joshua Mahony.

Global markets have whipsawed since the new Covid variant hit headlines seven days ago over concerns that it may be even more transmissible than the Delta strain and that vaccines may be less effective against it.

World oil prices won around 3.5 percent, extending Thursday’s gains after the OPEC+ group opened the door to cutting crude output should Omicron fallout cut energy demand.

– Key figures around 1430 GMT –

London – FTSE 100: UP 0.5 percent at 7,161.75 points

Frankfurt – DAX: UP 0.5 percent at 15,344.08

Paris – CAC 40: UP 0.5 percent at 6,829.97

EURO STOXX 50: UP 0.5 percent at 4,126.95

New York – Dow: UP 0.3 percent at 34,741.73

Tokyo – Nikkei 225: DOWN 1.0 percent at 28,029.57 (close)

Hong Kong – Hang Seng Index: DOWN 0.1 percent at 23,766.69 (close)

Shanghai – Composite: UP 0.9 percent at 3,607.43 (close)

Brent North Sea crude: UP 3.7 percent at $72.22

West Texas Intermediate: UP 3.4 percent to $68.79

Euro/dollar: DOWN at $1.1294 from $1.1306 at 2150 GMT

Dollar/yen: UP at 113.57 yen from 113.17 yen

Pound/dollar: DOWN at $1.3263 from $1.3305

Euro/pound: UP at 85.18 pence from 84.94 pence

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