Global markets will start this week on an upbeat note after the surprisingly strong US jobs report for July sent share prices higher overnight Friday and early Saturday, our time.
Friday’s trading came after a mixed session or two earlier last week.
Profit taking, Japan’s disappointing stimulus plans and continuing worries about Eurozone banks saw Japanese shares fall 1.9%, Australian shares by 1.2% and Eurozone shares lost 0.4%.
But the strong US payroll report on Friday with 255,000 new jobs reported, pushed the US share market up 0.4% for the week to a new record high and UK shares rose 1% helped by the Bank of England interest rate cut and aggressive monetary easing from the Bank of England on Thursday.
Chinese shares were flat for the week. Commodity prices were mixed with oil up slightly after bouncing off technical support after a 23% fall since their June high, but metal prices fell.
The $US rose, mainly after the strong jobs report on Friday, the $A was little changed at above 76 US cents. Bond yields rose sharply in the US (in the wake of the jobs report) and Japan, but were little changed in Australia.
Thanks to the strong July jobs report in the US, Eurozone shares gained 1.4% on Friday and the US S&P 500 rose 0.9%.
And reflecting that positive lead ASX 200 futures rose 31 points or 0.6% pointing to a positive start to trade this morning ahead of the release of Chinese trade data for July and an acceleration in the local June 30 profit reporting season.
On Wall Street, the Nasdaq stood out with a solid session. The index rallied by 1.1% on Friday to 5,221.121, topping the previous closing high of 5,184.196 achieved last Monday.
Friday’s gain puts it within striking distance of the intraday record of 5,231.943 reached last July.
The Dow surged 191.48 points, or 1%, to finish at 18,543.53. For the week, the Dow industrials climbed 0.6%, the S&P 500 gained 0.4%, and the Nasdaq rallied 1.1%.
While the US created a bumper 255,000 jobs in July – easily topping expectations of 180,000 jobs, analysts say the still-sluggish pace of wage growth (2.6% annual rate in July) means the Federal Reserve could afford to hold off on rate rises until probably next year.
But some economists reckon its ‘rate rise looms’ in either September or December. Nothing will happen in September because of the US Presidential and Congressional election campaign.
Traders are putting the odds of an interest rate rise by December at 46%, up from 37 % Thursday. The chances of a September rise is now 22%, up from 18%.
The Australian sharemarket ended the week on a positive, but a midweek slump led by the banks weighed on the index, which posted its first weekly loss in four weeks.
At close of trade on Friday, the ASX 200 ended 21.6 points or 0.4% higher at 5496.7, while the All Ordinaries finished 22.2 points or 0.4% higher at 5585.6.
