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US stocks rebound after jobs data

Traders work the floor of the New York Stock Exchange (NYSE) on March 5, 2020 in New York. — AFP pic

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LONDON, March 5 — US stocks rebounded today following encouraging jobs numbers, while oil prices jumped further.

The US economy added a better-than-expected 379,000 jobs in February, while average hourly earnings rose only a modest 0.2 per cent as analysts had forecast.

“The key takeaway from the report is that it will be seen as a sign of even better things to come for the labor market, which bodes well for growth prospects,” said analyst Patrick J. O’Hare at Briefing.com.

Shortly after the opening bell, the Dow was 1.0 per cent higher. The broader S&P 500 and tech-heavy Nasdaq also rose.

European stocks erased earlier losses after the US jobs numbers were released.

US stocks tumbled yesterday after US Federal Reserve boss Jerome Powell failed to soothe fears of a surge in inflation which many worry could force the US central bank to hike interest rates earlier than previously thought.

That prospect pushed the dollar to three-month highs versus the euro on Friday and undermined shares in Asia and in morning trading in Europe.

Powell yesterday reiterated that the Fed would not tighten policy until its goals of full employment and consistent inflation had been met — and that was likely to be some time away.

Traders were also left disappointed that Powell did not indicate he would act to ease the recent rise in bond yields.

The yield on benchmark 10-year US Treasuries spiked back above 1.5 per cent to a one-year high after his comments.

Yields rise as bond prices fall — and investors are rushing out of them as inflation would eat into their returns.

While the rollout of coronavirus vaccines, slowing infections, easing of lockdowns and an imminent new US stimulus are breathing life back into economies, investors are increasingly worried that ultra-loose monetary policies — a key pillar of a year-long equity surge — will be wound down if inflation spikes.

This has led to a sharp sell-off across world markets with the tech-rich Nasdaq yesterday almost sinking into correction territory — an accumulated 10 per cent drop from recent highs — after touching a record high last month.

US markets extended the week’s losses, with the Nasdaq down more than two per cent — tech firms being more sensitive to higher interest rates — while the Dow and S&P 500 dropped more than one per cent.

“The market doesn’t believe what the Fed is selling,” said market analyst Stephen Innes at Axi.

“The Fed won’t be able to put the rate hike genie back in the bottle anytime soon,” he added.

Meanwhile, oil prices also struck fresh 14-month peaks above US$68 (RM276) per barrel following yesterday’s surprise decision by OPEC and its major allies to maintain most output cuts until April.

“The surge in oil prices… will have done little to stem the mounting alarm over rising prices,” noted AJ Bell investment director Russ Mould.

Key figures around 1430 GMT

New York — Dow: UP 1.0 per cent at 31,223.39 points

London — FTSE 100: UP 0.8 per cent at 6,702.24 

Frankfurt — DAX 30: FLAT at 14,052.00

Paris — CAC 40: FLAT at 5,832.54

EURO STOXX 50: UP 0.2 per cent at 3,710.95

Tokyo — Nikkei 225: DOWN 0.2 per cent at 28,864.32 (close)

Hong Kong — Hang Seng: DOWN 0.5 per cent at 29,098.29 (close)

Shanghai — Composite: FLAT at 3,501.99 (close)

Euro/dollar: DOWN at US$1.1936 from US$1.1967 at 2200 GMT

Pound/dollar: DOWN at US$1.3861 from US$1.3894

Euro/pound: UP at 86.11 pence from 86.12 pence

Dollar/yen: UP at 108.28 yen from 107.95 yen

Brent North Sea crude: UP 3.1 per cent at US$68.80 per barrel

West Texas Intermediate: UP 2.9 per cent at US$65.67 per barrel — AFP

Reference