Global equities climb, dollar drops as US jobs data ease inflation fright

WASHINGTON: Global stocks rallied on Friday and oil and gold marched higher while the dollar fell after a solid but not blow-out U.S. monthly jobs report made investors less worried that the U.S. Federal Reserve would rein in monetary stimulus soon.

U.S. nonfarm payrolls data showed 559,000 jobs were created last month, a sharp increase in hiring from April but below the 650,000 expected from a Reuters poll of analysts.

The pan-European STOXX 600 index rose 0.39% after hitting a record high this week. MSCI's all-country world index , which tracks shares in 50 countries across the globe, gained 0.71%.

A stronger-than-expected jobs report would have heightened worries that the Fed might contemplate paring back its bond-buying program and raising interest rates.

"This lower payrolls number should keep investor concerns about inflation muted – as long as the job market remains depressed, it's hard to see wage inflation jumping higher," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.

Zaccarelli added that there may be some lingering concerns about overall price inflation as the Fed keeps rates lower for longer amid unprecedented fiscal stimulus.

Market whispers had been for a stronger number, analysts said.

On Wall Street, Microsoft lifted the S&P 500 , followed by Apple, as the index gained 35.55 points, or 0.85%, to 4,228.4, marking an overall near-record jump of more than 12% this year. Those technology firms account for more than 5% of the MSCI's all-country index's weight.

Shares for Amazon.com Inc, Facebook, Alphabet's Google and Tesla also were up.

The Dow Jones Industrial Average rose 153.51 points, or 0.44%, to 34,730.55 while the Nasdaq Composite added 200.28 points, or 1.47%, to 13,814.79.

So-called "meme stocks" continued their wild ride, with AMC Entertainment Holdings shares little changed but on track to nearly double for the week.

Analysts say investors were watching progress for proposed U.S. infrastructure spending. President Joe Biden was meeting with the main Republican negotiator on Friday in an effort to craft a deal that can satisfy their sharply divided camps.

U.S. Labor Secretary Marty Walsh in an interview with CNBC welcomed a "good, solid" jobs report and predicted more Americans would get back to work in coming months as the pandemic wanes with increased vaccinations.

Benchmark 10-year notes last rose 20/32 in price to yield 1.5602%, from 1.627%, while euro zone bond yields edged lower with investors looking for clues about the Fed's bond-buying tapering discussions.

Oil rose, with Brent topping $72 a barrel for the first time since 2019, as OPEC+ supply discipline and recovering demand countered concerns about a patchy COVID-19 vaccination rollouts around the globe.

The dollar index fell 0.357%, with the euro up 0.31% to $1.2162.

New orders for U.S.-made goods fell more than expected in April as a global semiconductor shortage weighed on production of motor vehicles and electrical equipment, appliances and components.

TAPER TALK
Investors have been parsing economic data to gauge whether inflation could prove sticky enough to force the Fed's hand on tapering.

"Will prolonged, low-wage inflation allow for a longer period of low, overall price inflation to reign? Or will a Fed that is slow to raise rates - because they are concerned about a weak labor market - create a higher-than-expected overall inflation regime? It's hard to know in advance, but we are all watching the experiment in real time and the consequences for all of us are high," added Independent Advisor Alliance's Zaccarelli.

Spot gold added 1.1% to $1,890.65 an ounce after a 2% tumble on Thursday, its biggest since February.