Despite Friday's surprise drop in the number of new jobs created in the US last month, American stockmarkets had a good week: the best week's gain in five years in fact.
Friday's surprise $US45 billion cash and shares bid from Microsoft for Yahoo helped, as did news of a move by Alcoa and Aluminum Corp of China to swoop on 12% of the London listed shares in Rio Tino.
Yahoo, the second-ranking Internet search company, had the best day since listing in 1996, although the gains were cut by news the US and European (and no doubt the Australian) competition authorities would be looking at the proposed deal.
Troubled US bond insurer, Ambac Financial Group rose, taking the rest of the financial sector with it, after reports that a group of eight banks including Citigroup, Barclays and RBS of Britain will provide the bond guarantor with financing to stop a downgrade that could trigger more losses for the banks and other investors in dodgy subprime debt and released securities.
The Standard & Poor's 500 Index added 16.87 02 (1.27%) to 1,395.42, (a turnaround from last month which saw the biggest January loss since 1990). The Dow climbed 92.83 points to 12,743.19 and the Microsoft bid pushed Nasdaq 23.5 points, or 1%, to 2,413.36.
Over the week, the S&P 500 climbed 4.9%, trimming its yearly loss to 5%. The Dow average gained 4.4% this week and the Nasdaq increased 3.8%.
European indexes mostly rose, with Europe's Stoxx 600 adding 1.9%. The Index shed 12% last month, the biggest drop since it began in 1987, on concern the US is sliding into recession.
Across Asia the longest losing streak in more than three years continued (although it might ease today after Friday's rise in New York).
The MSCI Asia Pacific Index fell 0.5% and is now down 7.1% over the past five weeks. China's CSI 300 Index plunged 10% and Japan's Nikkei 225 Stock Average slipped 1%. Only Indonesia, Philippines, Thailand and Pakistan rose.
Yahoo shares climbed $US9.20, or 48%, to $US28.38. Microsoft's unsolicited bid offered Yahoo shareholders cash or stock in the world's largest software maker. Yahoo shares were up 56% until the US Justice Department said it would examine the deal.
The most telling reaction was what happened to Microsoft shares: they had their worst fall in 21 months as they tumbled $US2.15 (6.6%) to $US30.45.
The news about the possible bailout of Ambac (which is being overseen by the New York State Government) seems to be aimed at heading off a re-rating of the group (and possible other bond insurers) by Moody's and S&P.
As a result of this move and the Fed's second rate cut in eight days, The S&P 500 Financials Index gained 8.5% last week, the biggest advance in five years and battered investors tried to find a silver lining amid the flood of bad news in recent weeks which Bloomberg says has seen write-downs and credit losses of more than $US148 billion for 32 of the world's largest financial institutions.
The US Labor Department said payrolls fell 17,000 last month. Bloomberg said none of the 80 economists surveyed had forecast a decline in jobs in January.
The report also showed payrolls rose by 82,000 in December, more than initially projected, but November's rise was cut. The jobless rate declined to 4.9% in January from 5% In December.
In Australia the market had a huge day Friday and looks like following up with another surge today because of the Rio Tinto bid situation.
The ASX/200 was up 192.6 points, or 3.41%, at 5842.9, while the All Ordinaries jumped 185.3 points, or 3.25%, to 5882.3.
In the resources sector, BHP Billiton rose $1.50 to $38.55, Rio Tinto added $4.31 to $127.31. There was some late strength and it seems the Alcoa/Chinalco buying spree in London was starting to have an impact here late in the day.
Rio subsidiary, uranium miner Energy Resources of Australia, which jumped 97c to $19.80 reported a 74.5% rise in 2007 profit and said the outlook for the uranium market was positive.
The banks recovered much of their poise after concern about the future health of margin broker, Tricom, eased.
The National Australia Bank rose 80c to $35.40, the Commonwealth Bank jumped $1.72 to $51.12, Westpac picked up 94c at $26.52, and ANZ rose 88c to $26.89.
Banking and insurance group Suncorp-Metway rose 63cto $15.97 despite reporting more problems with storms and other claims in its merging insurance business.
Woolworths gained 60c to $29.40, shaking off worries about a sales slowdown and Wesfarmers, which owns Coles, was up $2.10 at $37.40.
Gold futures fell Friday as the US dollar rebounded against the euro, while silver dropped from the highest level since 1980.
Gold climbed to a record $US942.20 an ounce on January 30 as the Fed cut its benchmark interest rate by 0.5% (1.25 percentage point last month) to 3%, sending the dollar lower.
Friday saw April gold futures fall $US14.50, or 1.6%, to $US913.50 an ounce on Comex but the most-active contract still climbed 0.3% over the week.
The metal rose 31% in 2007.
March silver futures fell 12.5 USc, or 0.7%, to $US 16.87 an ounce after hitting $US17.345, the highest since December 1980. The metal rose 2.3% last week.
Crude oil also eased on the US jobs news and the firmer greenback.
March crude fell $US2.79, or 3%, to settle at $US88.96 a barrel In Nymex. It fell to a day's low of $US88.46.
The most active March contract fell 1.9% last week and futures prices are down 11% since reaching that record of $US100.09 a barrel on January 3.
The decline happened amid concern economic growth may slow with the drop in jobs last month: an indicator that slowing growth is happening.
OPEC's decision to keep production targets unchanged didn't have much of an impact with the Fed's second rate cu
