Global stock markets mostly up, with Wall Street buoyed by strong US jobs report

Signs of a resilient economy could lead the Fed to raise interest rates again

US employers added 336,000 jobs in September, up from August's revised gain of 227,000, data from the Labour Department showed. AFP

Global stock markets were mostly up at Friday's close, with Wall Street rebounding, lifted by a stronger-then-expected US jobs report.

Hiring in the world's largest economy surged in September, signalling a resilient economy that could lead the Federal Reserve to raise interest rates again before the end of the year.

Employers added 336,000 jobs in September, up from August's revised gain of 227,000, data from the Labour Department showed.

While Friday's report was apparent evidence that the Biden administration's labour strategy was working, it has led to an unexpected twist in the Federal Reserve's inflation battle, which could lead to consumers facing higher borrowing costs for a longer time.

The US central bank left its target rate unchanged at between 5.25 per cent and 5.50 per cent last month. A majority of policymakers predicted one more quarter-rate increase this year.

Fed chairman Jerome Powell has said the central bank would take a careful, data-driven approach, adding that the Fed needs more than three months of favourable data to determine if it is done with raising rates, but cautioned that more increases could be necessary if the data merits it.

“The US jobs market must do the rest of the heavy lifting if the Fed wants to see inflation return and steady around its 2 per cent monetary policy target. That makes the US employment and unemployment numbers critical for investors, again,” Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, wrote in a note.

Loretta Mester, president of the Federal Reserve Bank of Cleveland, told CNN that Friday’s jobs report did not change her view that the US labour market remains robust, and that further interest rate rises will depend on upcoming economic data.

“The inflation rate is still too high, the level of inflation remains high, but at least we’re seeing progress on it,” Ms Mester said.

“And whether we need to tighten monetary policy a bit further or not is really going to depend on all the data that we get between now and our next meeting.”

Wall Street indices reversed earlier losses to finish stronger. The Dow Jones Industrial Average gained 0.9 per cent, the S&P 500 rose 1.2 per cent and the tech-heavy Nasdaq Composite surged 1.6 per cent.

For the week S&P 500 and Nasdaq gained 0.5 per cent and 1.6 per cent, respectively, while the Dow shed 0.3 per cent. Year-to-date, they are up 12.2 per cent, 28.3 per cent and 0.8 per cent, respectively.

In Europe, London's FTSE 100 settled 0.6 per cent higher, but posted a sharp weekly loss as government bond yields surged on expectations of higher interest rates.

In other major European indices, Frankfurt's DAX surged 1.1 per cent at the close, while Paris' CAC 40 settled 0.9 per cent higher.

Loretta Mester, president of the Federal Reserve Bank of Cleveland, said efforts to cut inflation were to be welcomed. Reuters

Earlier in Asia, Tokyo's Nikkei 225 settled 0.3 per cent lower, while Hong Kong's Hang Seng index jumped 1.6 per cent. The Shanghai Composite was closed for a holiday.

In commodities, oil prices closed higher on Friday but posted their biggest weekly loss since March amid demand concerns.

Brent gained 0.61 per cent, or $0.51, to settle at $84.58 a barrel while West Texas Intermediate rose 0.58 per cent, or $0.48, to close at $82.63 a barrel.

For the week, Brent dropped about 11 per cent, while WTI posted a more than 8 per cent decline.

Gold, meanwhile, rose 0.7 per cent, or $13.40, to settle at $1,845.20 an ounce on Friday. The precious metal, used as a hedge against inflation, rebounded after nine consecutive sessions of losses.