Stock markets rise as Fed seen pausing over US rate hikes / Photo: © AFP
Stock markets rise as Fed seen pausing over US rate hikes
Stock markets rose and the dollar weakened against the euro and pound Monday as US jobs data firmed expectations that the Federal Reserve would stop raising interest rates.
While the 187,000 new US jobs in August was more than forecast, the figures for the previous two months were revised significantly lower, while wage growth cooled.
Friday's readings suggested that the world's biggest economy was not in danger of tipping into recession.
Yet it was slowing enough to justify no further rate rises -- a so-called "Goldilocks" scenario.
"Fed chair (Jerome) Powell, or President (Joe) Biden for that matter, probably couldn't have scripted a better August employment report if they'd tried," said Ray Attrill at National Australia Bank.
"The Goldilocks metaphor is much used and abused in economic and financial circles, but in relation to the various 'soft landing' signals emanating from the report, on this occasion it does seem entirely appropriate."
Michael Hewson at CMC Markets added: "From the Fed's point of view this is exactly the type of report they would have wanted to see to justify keeping monetary policy unchanged this month.
"If that trend continues, and there's no reason to suppose it won't then it's quite reasonable to assume that we could well have seen the last of Fed rate hikes for this economic cycle."
After a broadly positive Friday on Wall Street, Asian and European equities enjoyed a healthy start to the week.
Hong Kong jumped more than two percent as investors played catch-up with Friday's regional advance after being closed because of a typhoon.
Shanghai, Tokyo, Sydney, Seoul, Singapore, Mumbai, Taipei, Manila and Jakarta were also in the green.
London and Paris were up heading toward the half-way stage, while Frankfurt was in positive territory as data showed German exports fell less than expected in July.
Wall Street was closed Monday for the US Labor Day holiday.
- China signals -
Investors were keeping an eye also on China, hoping for more measures to stimulate the world's second largest economy after a number of announcements last week, including reducing mortgage down payments and tax incentives.
"While these individual easing measures may not appear substantial, their collective implementation clearly signals policymakers' intentions to stabilise the property market, spur economic growth, and boost overall sentiment," said SPI Asset Management's Stephen Innes.
"Further targeted measures are anticipated to be incrementally introduced until policymakers are content with the achieved results."
However, observers say that traders are yearning for the government to unveil a big-bang stimulus similar to the $550 billion seen in 2008 during the global financial crisis.
News that battered developer Country Garden had won approval from creditors to extend a deadline for a key bond repayment, narrowly avoiding a potential default, provided some much-needed relief from worries over China's property sector.
- Key figures around 1100 GMT -
London - FTSE 100: UP 0.4 percent at 7,495.61 points
Frankfurt - DAX: UP 0.5 percent at 15,913.88
Paris - CAC 40: UP 0.5 percent at 7,333.93
EURO STOXX 50: UP 0.7 percent at 4,312.53
Tokyo - Nikkei 225: UP 0.7 percent at 32,939.18 (close)
Hong Kong - Hang Seng Index: UP 2.5 percent at 18,844.16 (close)
Shanghai - Composite: UP 1.4 percent at 3,177.06 (close)
New York - Dow: UP 0.3 percent at 34,837.71 (close on Friday)
Euro/dollar: UP at $1.0804 from $1.0777 on Friday
Pound/dollar: UP at $1.2634 from $1.2590
Dollar/yen: UP at 146.33 yen from 146.25 yen
Euro/pound: DOWN at 85.50 pence from 85.58 pence
Brent North Sea crude: UP 0.1 percent at $88.61 per barrel
West Texas Intermediate: UP 0.2 percent at $85.70 per barrel
E.Cox--TNT
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