Global shares rise after weak US jobs numbers add to pressure on Fed to postpone rate hike

London (Oct 5)  World stocks rose Monday after weak U.S. jobs data prompted expectations the Federal Reserve might postpone an interest rate hike.

KEEPING SCORE: In early trading, France’s CAC-40 index jumped 2.7 per cent to 4,578.09 and Germany’s DAX advanced 2 per cent to 9,745.11. Britain’s FTSE 100 added 1.9 per cent to 6,244.37. Wall Street looked set for gains. Futures for the Dow Jones industrial average rose 0.3 per cent to 16,426.00. S&P 500 futures gained 0.2 per cent to 1,947.10.

US JOBS: The Labor Department reported employers added 142,000 workers last month, less than the 200,000 anticipated on Wall Street, and hired fewer people in July and August than previously thought. The unemployment rate stayed at 5.1 per cent, but only because many Americans have stopped looking for work and are no longer counted as unemployed. The news was taken as a positive by investors who want the Fed to postpone a rate rise expected as early as October. Ultra-low interest rates in place since the 2008 global crisis have helped push up stock prices.

ANALYST’S TAKE: “The absolutely weak nonfarm payrolls data complicated the Fed’s resolve to raise rates this year. Markets reacted to the soft reading by buying both stocks and bonds,” said IG analyst Bernard Aw in a report. “The soft jobs numbers in the last two months certainly make October rate lift-off an even more unlikely endeavour for a data-dependent Fed. The labour market conditions which have been solid for much of this year seem a tad less solid now. The question is now whether the Fed thinks that these developments are indicative of a softening of the jobs market or just a temporary blip in the otherwise strong recent trend.”

ASIA’S DAY: Hong Kong’s Hang Seng rose 1.8 per cent to 21,854.50 and Tokyo’s Nikkei 225 gained 1.6 per cent to 18,005.49. Australia’s S&P/ASX 200 rose 2 per cent to 5,150.50 and India’s Sensex advanced 1.7 per cent to 26,680.83. South Korea’s Kospi added 0.4 per cent to 1,978.25. Taiwan, Singapore, Manila and Jakarta also rose. Markets in mainland China are closed for holidays until Thursday.

JAPANESE WAGES: Wage growth slowed to 0.5 per cent over a year earlier in August, down from July’s 0.9 per cent. That could restrain growth in consumer demand, setting back the Bank of Japan’s stimulus plans, which call for boosting inflation to 2 per cent. The near-term outlook for wages is “not particularly bright,” said Marcel Thieliant of Capital Economics in a report. “An increase in wages of this magnitude would still be broadly in line with trend productivity growth. The upshot is that the labour market is unlikely to create sufficient price pressures to reach the Bank of Japan’s 2 per cent inflation target for the foreseeable future.”

ENERGY: Benchmark U.S. crude gained 57 cents to $46.11 per barrel in electronic trading on the New York Mercantile Exchange. The contract added 80 cents on Friday to close at $45.54. Brent crude, used to price international oils, advanced 66 cents to $49.46 per barrel in London. On Friday, it rose 41 cents to $48.79.

CURRENCIES: The dollar rose to 120.18 yen from Friday’s 119.96 yen. The euro edged up to $1.1255 from $1.1210.

Source: CanadianBusiness