By Katanga Johnson
WASHINGTON (Reuters) – Global stocks rallied on Friday and closed near all-time highs, and oil and gold rose as the dollar fell after U.S. jobs data was solid but not as robust as expected, allaying investor fears that the Federal Reserve will soon reduce in monetary stimulus.
American employers increased their hires in May and raised wages. But the increase in the non-farm payroll of 559,000 jobs has landed below the 650,000 forecasts of economists polled by Reuters.
The pan-European STOXX 600 index rose 0.39% after hitting a record high this week. MSCI’s All-Country World Index, which tracks the shares of 50 countries around the world, gained 0.71%.
A stronger-than-expected jobs report would have heightened fears that the Fed is considering cutting its bond buying program and raising interest rates.
“This lower payroll number should alleviate investor worries about inflation – as long as the job market remains depressed, it’s hard to see wage inflation rise,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.
Zaccarelli added that there could be lingering concerns about headline price inflation as the Fed keeps rates low for longer amid an unprecedented fiscal stimulus.
Market whispers were more prominent, analysts said. US Secretary of Labor Marty Walsh in an interview with CNBC welcomed a “good and strong” employment report and predicted that more Americans would return to work in the coming months as that more would be vaccinated.
On Wall Street, Microsoft raised the S&P 500, followed by Apple, as the index gained 37.04 points, or 0.88%, to 4,229.89, marking a near-record overall jump of over 12% this year. These technology companies represent more than 5% of the weight of the MSCI all-country index.
Shares of Amazon.com Inc, Facebook, Alphabet’s Google and Tesla were also up.
The Dow Jones Industrial Average rose 179.35 points, or 0.52%, to 34,756.39 while the Nasdaq Composite added 199.98 points, or 1.47%, to 13,814.49.
So-called “memes stocks” continued to run wild, with AMC Entertainment Holdings’ shares showing little change but nearly doubling for the week.
Analysts said investors were monitoring the progress of proposed infrastructure spending in the United States. President Joe Biden has rejected a new proposal from Republican Senator Shelley Moore Capito, the White House has said. They were to meet on Monday.
10-year benchmarks last rose 20/32 for a return of 1.5585%, from 1.627%, while eurozone bond yields edged down as investors questioned the Fed policy.
Oil rose, with Brent surpassing $ 72 a barrel for the first time since 2019 as an OPEC + supply discipline and demand recovery.
The dollar index fell 0.39%, the euro up 0.36% to $ 1.2168. Strategists in a Reuters poll were almost evenly divided on the dollar’s near-term direction.
New orders for US-made products fell more than expected in April, as a global semiconductor shortage weighed on production of motor vehicles and electrical equipment, appliances and components.
Investors analyzed the economic data to assess whether inflation could force the Fed to change course.
“Will prolonged low-wage inflation allow a longer period of low headline price inflation to prevail?” Or will a Fed that is slow to raise rates – because it worries about a weak labor market – will create a higher-than-expected headline inflation regime? Said Zaccarelli of the Independent Advisor Alliance.
Spot gold gained 1.1% to $ 1,890.65 an ounce after falling 2% on Thursday, its strongest since February.
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(Reporting by Katanga Johnson in Washington; editing by Jonathan Oatis and David Gregorio)