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GLOBAL MARKETS-Stocks rally, commodities jump on U.S. jobs report

05/07/2021 12:21
GLOBAL MARKETS-Stocks rally, commodities jump on U.S. jobs report

MSCI AWCI, Dow, S&P500 indexes hit fresh highs

Copper hits all-time high on recovery prospects

Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn

Graphic: World FX rates http://tmsnrt.rs/2egbfVh

By Herbert Lash and Ritvik Carvalho

- The dollar slid to a two-month low, commodity prices jumped and major global equity indexes scaled new peaks on Friday after weak U.S. jobs data for April tamped down fears that a booming economy would ignite inflation and higher interest rates.

The data eased worries the Federal Reserve would reduce its massive stimulus program anytime soon, while a top White House economic adviser said the report does not mean the Biden administration needs to change its policy course. nL1N2MU1BA

The yield on the benchmark 10-year U.S. Treasury note dropped to a two-month low of 1.469% and gold extended a rally that put it on track for its best week since November. Copper burst to a record peak, surpassing a high set a decade ago.

Nonfarm payrolls increased by only 266,000 jobs in April and data for March was revised down to show 770,000 jobs were added instead of 916,000 as previously reported. The report doused fears of an overheating economy that would spur inflation.

"Anybody who thought the Fed is going to be tapering sooner than later, that's not happening," said Joseph LaVorgna, chief economist for the Americas at Natixis in New York.

"There is no inflation coming on the labor side. The economy is booming, and the labor market recovery is still ongoing."

MSCI's benchmark for global equity markets .MIWD00000PUS rose 1.02% to 711.29. Europe's broad FTSEurofirst 300 index .FTEU3 added 0.84% to close at 1,712.4. Both indexes set new highs.

On Wall Street, the Dow Industrials and S&P 500 hit new peaks. The Dow Jones Industrial Average .DJI rose 0.45%, the S&P 500 .SPX gained 0.79% and the Nasdaq Composite .IXIC added 1.32%, as low rates benefit high-growth technology firms.

Overnight in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose about 0.4%, while Japan's Nikkei .N225 gained about 0.2%. Chinese blue chips .CSI300 closed 1.3% lower on the day.

MSCI's emerging market currency index .MIEM00000CUS sailed to a new record high, lifted by the weaker dollar =USD after the U.S. jobs data.

"The market expectation of super-high rates and a squeeze on inflation is going to go down by the wayside, and that obviously means more liquidity from the Fed," said Boris Schlossberg, managing director of FX strategy at BK Asset Management.

"U.S. interest rates will stay at ultra-low levels for quite a while and that is going to keep the pressure on the dollar."

The dollar index =USD fell 0.704%, with the euro EUR= up 0.81% to $1.2162. The Japanese yen strengthened 0.51% versus the greenback at 108.51 per dollar.

Higher-rated euro zone bond yields dipped after the U.S. employment data missed expectations. Euro area benchmark German 10-year yields reversed earlier gains and were trading flat at -0.218%.

The 10-year U.S. Treasury US10YT=RR yield rose 0.5 basis points to 1.5664%.

Oil prices were little changed as the COVID-19 crisis in India worsened, but prices were set for a weekly gain against the backdrop of optimism over a global economic recovery.

Brent crude futures LCOc1 rose $0.14 to $68.23 a barrel. U.S. crude futures CLc1 gained $0.07 to $64.78 a barrel.

Spot gold prices XAU= rose $16.63 to $1,831.81 an ounce.

Aluminum prices approached levels last seen in 2018 and copper CMCU3 hit an all-time high as investors bet on a rapid global recovery from the pandemic, led by the United States. MET/L Iron ore futures also vaulted to a record high. nL4N2MT5YU nL1N2MU03V

Emerging markets http://tmsnrt.rs/2ihRugV

Global asset performance http://tmsnrt.rs/2yaDPgn

U.S. non-farm payrollshttps://tmsnrt.rs/3eZrWAB

(Reporting by Ritvik Carvalho; additional reporting by Kevin Buckland in Tokyo; editing by Angus MacSwan and Alex Richardson)

(([email protected]; +44 2075429406; Reuters Messaging: [email protected]; Twitter @ritvikcarvalho))