(Corrects headline, first sentence and seventh paragraph to state that bond yields, not bond prices fell)
NEW YORK:Global stock markets rose on Friday as a better-than-expected U.S. monthly jobs report signaled a strong end to the second quarter for the world’s largest economy, while U.S. bond yields fell as investors worried about the Federal Reserve’s response.
Data showed U.S. job growth accelerated in June as nonfarm payrolls increased by 850,000 jobs after rising by 583,000 in May, although the unemployment rate rose to 5.9% from 5.8% the previous month. Economists polled by Reuters had forecast payrolls advancing by 700,000 jobs.
The MSCI All Country World index gained 0.42%, while the pan-European STOXX 600 index rose 0.26%. On Wall Street, the S&P 500 and Nasdaq hit record highs.
“For capital markets, equities and bonds, this was a Goldilocks report,” said Darrell Cronk, chief investment officer at Wells Fargo wealth and investment management. “This was perfect. There were enough jobs that you’d want to see but not so many that it concerns people that the Fed may have to act sooner.”
Still, gold edged higher and the dollar fell from a three-month high as investors weighed prospects that Fed policy would tighten following the jobs report. [GOL] The Dow Jones Industrial Average rose 150.8 points, or 0.44%, the S&P 500 gained 28.35 points, or 0.66%, and the Nasdaq Composite added 98.23 points, or 0.68%. [.N]
The benchmark 10-year yeild fell 1.43%. Euro zone government bond yields fell, as investor fears over the rise in COVID-19 cases outweighed strong U.S. data. Germany’s 10-year bond yield, the euro zone benchmark, dropped to -0.24%, its lowest since mid-June.
The dollar slipped from a three-month high, pressured by the weaker details of the U.S. nonfarm payrolls report.
U.S. employment remains about 6.8 million jobs below its peak in February 2020. There are a record 9.3 million job openings. The dollar index fell 0.375 points or 0.4% to 92.222.
The Japanese yen was last down 0.39 percent, at $111.0600.
While prospects of a strong economic recovery underpinned equity markets, investors remain nervous that a sharp recovery from the pandemic could boost inflation to an uncomfortable level for the Fed.
Former U.S. Treasury Secretary Lawrence Summers has said massive U.S. fiscal spending will set off inflationary pressures not seen in a generation. Others argue that until wage pressures return in force, a return to 1970s-style inflation is unlikely.
Spot gold prices rose $4.71 or 0.27%, to $1,781.31 an ounce.
OPEC+ resumed talks on raising oil output a day after the United Arab Emirates blocked a deal. The standoff could delay plans to pump more oil through the end of the year to cool prices that have soared to 2-1/2 year highs.
Oil prices ended the week mixed. Brent crude settled up 33 cents, or 0.44%, and U.S. crude settled down 7 cents, or 0.09%. [O/R]
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