Business World

Saturday 18 August 2018

Positive US jobs data and European politics lift markets

The Dow Jones Industrial average is displayed on a screen after the closing bell at the New York Stock Exchange (NYSE). Photo: Reuters
The Dow Jones Industrial average is displayed on a screen after the closing bell at the New York Stock Exchange (NYSE). Photo: Reuters

Reuters

US stocks rose yesterday after the latest monthly jobs report pointed to strength in the world's largest economy.

The upbeat jobs report also cemented expectations of at least two more rate hikes by the Federal Reserve this year.

Technology stocks led the rally, with gains in behemoths such as Apple, Microsoft and Alphabet lifting the S&P tech index to a record high.

Government data showed the US economy added 223,000 jobs in May, while the average hourly earnings rose 0.3pc after edging up 0.1pc in April, both topping estimates by economists polled by Reuters.

US unemployment fell to an 18-year low of 3.8pc.

Prospects of interest rate hikes lifted the S&P financial index by 1.3pc, with shares of big US banks gaining between 1.2pc and 2.2pc.

In Europe, Italian and Spanish borrowing costs fell yesterday after anti-establishment parties in Italy revived a coalition deal, apparently averting snap elections, while in Spain socialist Pedro Sanchez took over as prime minister. Efforts to end three months of political turmoil in Italy were the main focus, pushing peripheral Eurozone bond yields down for a third straight day.

Italian two-year yields, which soared to five-year highs of more than 2.7pc on Tuesday in a throwback to the euro debt crisis, recouped some of the losses yesterday.

However, investors are keeping an eye out on developments around trade after Washington imposed steel and aluminium tariffs on imports from Canada, Mexico and the European Union.

Canada and Mexico retaliated, targeting products from the US such as bourbon whiskey, orange juice, steel, aluminium and others.

European shares, led by Italy, breathed a sigh of relief yesterday.

The Iseq closed up 0.60pc, the pan-European STOXX 600 index rose 1pc, German stocks gained 0.9pc and Britain's FTSE 100 rose 0.3pc.

Italian stocks rallied as much as 2.9pc, the standout performers in Europe as Italian banks gained 3.8pc.

Irish Independent

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