Asian investors welcomed a forecast-busting United States jobs report to send regional equities higher on Friday, though an acceleration in virus infections across the world’s top economy tempered big gains.
European stock markets retreated, with the investors banking recent strong gains made on solid United States jobs data.
While the US registered more than 50,000 new cases for a second straight day and authorities across the country reimposed containment measures, traders backed up with a wall of government and central bank cash chose to look to the positives.
And a near-five million jump in employment in June, combined with promising vaccine tests, provided the platform for another market rally that saw the Nasdaq clock up yet another record.
The jobs report showed people returning to jobs in hard-hit and crucial sectors such as leisure and hospitality, which accounted for just under half of the increase.
The US advances, and a strong performance in Europe — where countries are pressing ahead with lockdown easing — gave Asia a strong lead, which investors picked up on.
Playing catch-up with Thursday’s American employment figures, Hong Kong added 1 per cent, Tokyo gained 0.7 per cent and Shanghai jumped 2 per cent as traders also looked beyond ChinaHong Kong tensions.
Sydney climbed 0.4 per cent and Seoul put on 0.8 per cent, while there were healthy advances in Taipei, Seoul, Wellington, Singapore and Mumbai. Manila reversed early losses.
But Europe was down at the half-way mark on Friday, with London losing 1.2 per cent, Frankfurt shedding 0.5 per cent and Paris off 0.9 per cent.
The euro fell versus the dollar and was flat against the British pound.
World oil prices retreated more than 1 per cent.
‘Now that the dust has settled in regards to the 4.8 million jobs that were added in the US last month, dealers might reflect on the fact that the continuing claims reading actually ticked up,’ said David Madden, analyst at CMC Markets UK.
‘Volatility and trading volumes are expected to be low today as the US market will remain closed as it is a public holiday,’ Madden added.
‘There’s still a general positive sentiment about how quickly we’re seeing the recovery,’ said Chris Gaffney at TIAA Bank said.
‘But we do think you’re going to see the recovery level off, especially if we continue to see higher case numbers on the virus.’
Analysts warned that while the employment data were good, jobless claims were still elevated — at 1.43 million last week, which was slightly better than the week before but missed expectations.
They pointed out that the latest spike in infections and the reclosure of some businesses around the US, particularly in the Sun Belt, could set the recovery back.
‘The non-farm payrolls report is a mid-June snapshot, which might have been the ‘sweet spot’ of near-term employment optimism as the virus situation in the US has deteriorated sharply since,’ warned AxiCorp’s Stephen Innes.
‘It would be tough to take the better-than-expected... payrolls numbers and extrapolate that there will be a V-shaped recovery in the US,’ he added. ‘The economy has brought back only about 30 per cent of the jobs lost.’
White House economic adviser Larry Kudlow injected some nervousness into trading floors by telling Fox Business Network that the US was ‘very unhappy with China’.
He added that there were ‘going to be export restrictions, particularly with respect to military, national security and some sensitive high technology’.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Stocks