Global stock markets up as strong US jobs report calms nerves about economy

The robust labour figures, however, are unlikely to 'materially alter' the Federal Open Market Committee's policy outlook

British actress Elizabeth Hurley, global ambassador of S&P 500-listed Estée Lauder Companies' breast cancer campaign, visits the New York Stock Exchange on Wednesday October 2. AFP

Global stock markets rose on Friday, with the Dow Jones Industrial Average hitting a record, as a surprisingly strong US jobs report eased worries about the health of the world's biggest economy.

Job growth in the US beat expectations last month, with more than 250,000 jobs created in September, following an upwardly revised 72,000 advance over the previous two months, data released by the Bureau of Labour Statistics on Friday showed. The unemployment rate fell to 4.1 per cent.

Combined with data earlier this week showing demand for workers is still healthy while layoffs remain low, the payrolls report is likely to alleviate concerns that the labour market is cooling too quickly.

The apparent resilience in the job market is expected to further reduce the likelihood of the Federal Reserve slashing interest rates before the end of the year and could also play a role in the November 5 election, where the main concern for US voters is the economy.

However, despite the robust labour figures, the report is unlikely to “materially alter” the Federal Open Market Committee's policy outlook, said Michael Brown, a senior research strategist at online broker Pepperstone.

Fed Chairman Jerome Powell's “recent assertion that the committee is 'not in a hurry' to cut quickly, along with [Friday's] incredibly solid data slate, means that a return to a more normal cadence of 25-basis-point cuts is likely at the November meeting, and at each meeting beyond that, until the Fed funds rate returns to a neutral level next summer”, he said.

Also on Friday, the International Longshoremen’s Association, which represents 45,000 dockworkers at East and Gulf coast ports in the US, reached a deal to suspend a three-day strike until January 15, to provide time to negotiate a new contract.

That helped temper concerns that a prolonged strike could negatively affect US shipping and logistics, which would have pushed inflation up and weighed on the economy.

On Wall Street, the Dow closed 0.8 per cent to hit a new high. The benchmark S&P 500 added 0.9 per cent, hovering near its record set on Monday. The tech-heavy Nasdaq Composite rose 1.2 per cent.

Fed's interest rate cut: How Gulf economies are reacting

01:02

For the week, the Dow inched up 0.1 per cent, the S&P 500 climbed 0.2 per cent and the Nasdaq added 0.1 per cent. Year-to-date, the indices have leapt 12.4 per cent, 20.6 per cent and 20.8 per cent, respectively.

In Europe, London's FTSE 100 closed flat, recouping gains following the US jobs report but declining for the week on concerns over rising geopolitical tensions in the Middle East.

Paris' CAC 40 added 0.9 per cent, while Frankfurt's DAX rose 0.6 per cent.

Earlier in Asia, Hong Kong's Hang Seng Index jumped 2.8 per cent at the close, finishing its best day since March 2022, as investors remained optimistic on China's sweeping stimulus measures to prop up the world's second-largest economy.

Tokyo's Nikkei 225 climbed 0.2 per cent, after a week that witnessed volatile market and yen movements after Shigeru Ishiba was elected as Japan's Prime Minister. The Shanghai Composite and other mainland China markets – which, thanks to the stimulus package, were propelled to their biggest single-day gains in 16 years on Monday – were closed for the Golden Week holiday.

In commodities, oil prices posted their biggest weekly jump since the first quarter of 2023 amid escalating geopolitical tension, with the possibility of an Israeli retaliatory strike on Iran's oil infrastructure prompting worries over supply disruption.

Brent settled 0.55 per cent higher at $78.05 a barrel, while West Texas Intermediate closed up 0.91 per cent at $74.38 a barrel. For the week, the benchmarks leapt 8.9 per cent and 9.1 per cent, respectively.

Gold, meanwhile, declined as the stronger-than-expected US jobs report whittled expectations for more aggressive Fed interest rate cuts.

The precious metal retreated 0.09 per cent to settle at $2,653.25 an ounce. Gold, considered a safe haven and hedge against inflation, surpassed the $2,600 mark in response to the Fed's 50-basis point interest rate cut on September 18.

“A milder rhythm of interest rate cuts could leave the gold market with less support and could limit its ability to record new highs and could expose the market to short-term losses,” said Bas Kooijman, chief executive of Luxembourg-based asset management firm DHF Capital.