The US stock markets reached new highs on Friday. The S&P 500 index smashed through the 1600 mark for the first time in history. All 30 companies on the Dow Jones Industrial Average rose as that benchmark crossed 15 000 for the first time after better than expected jobs reports. Non-farm payrolls increased with 165 000 jobs in April. Analysts forecast was 140 000. The unemployment rate fell to 7,5%, the lowest level since December 2008. Asian stocks spurred higher Monday morning on the US job data.
The better than expected jobs report eased fears about the health of the world’s largest economy which remains on a path of modest, but resilient growth. The Federal Reserve (FED) indicated last week that it is prepared to increase the USD 185 Billion –a-month pace of its third round of quantitative easing. The new figures mean there is little chance for such an increase. The job creation in April was heavily weighted towards the service sector. The production side with construction was shedding 6000 jobs. There is also a dip in average weekly hours from 34,6 to 34,4.
The US job data follow central banks meetings last week. While the US FED expressed readiness to increase monetary easing, the European Central Bank (ECB) informed that if necessary it would consider taking deposit rates negative. The mere fact that the key central banks aired such an opportunity was enough to sustain the rally in stocks, bonds and credit demonstrated by the new records on Wall Street and the positive sentiments in Asia this morning. Decreasing rates meaning that stocks are the most attractive alternative investment.
Oil prices have also been given a boost by the US jobs reports. New York crude (NYMEX) is for the first time in weeks trading above USD 96 a barrel. Brent crude is at 104,50. Copper is in the limelight after a 6,5% rally to USD 7 270 on Friday. Copper has fallen nearly 20 percent in the past three months on worries of a slowing world economy. Japanese yen is falling against the dollar trading at 99,08 yen to a dollar. Euro/USD is at 1.3122.
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