NEW YORK- Modest job growth in the United States buoyed world stock markets broadly, helping calm markets after one of the worst weeks for equities in months.
The unemployment rate in the world’s largest economy fell to a 50-year low in September, helping ease worries that the United States was on a path to recession after weak data earlier this week showed a slowdown in US manufacturing and services. The string of weak data had sharply raised market expectations of additional interest rate cuts by the Federal Reserve.
“We’ve had such a string of bad news, that anything that shows the economy is doing better than perhaps people have been talking about is well received,” said J.J. Kinahan, chief market strategist at TD Ameritrade in Chicago.
MSCI’s gauge of stocks across the globe gained 0.36 percent.
On Wall Street, the Dow Jones Industrial Average rose 132.15 points, or 0.5 percent, to 26,333.19, the S&P 500 gained 13.37 points, or 0.46 percent, to 2,924 and the Nasdaq Composite added 33.50 points, or 0.43 percent, to 7,905.77.
Bond yields were little changed, suggesting that investors remain concerned about the US economy. Benchmark 10-year notes last rose 5/32 in price to yield 1.5187 percent, from 1.536 percent late on Thursday.
Talks between Beijing and Washington will resume next week to work towards a truce in the protracted trade spat between the world’s two largest economies, although hopes of a definitive agreement are pretty low.
Traders see a 85 percent chance the Fed will cut rates by 25 basis points to 1.75 percent-2.00 percent in October, up from 39.6 percent on Monday, according to CME Group’s FedWatch tool.
The Fed has already cut rates twice this year as policymakers try to limit the damage caused by the bruising trade war.
“This [jobs] data probably reinforces the case that the US is now beginning to feel the effects of the ongoing global slowdown and probably strengthens the case for additional rate cuts, if the Fed chooses to go down that path,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute in St. Louis, Missouri. – Reuters
