A roundup of trading on major world markets:
NEW YORK – Wall Street has extended a seven-week rally after upbeat US jobs and factory data raised hope of stronger corporate earnings.
The Labour Department’s report showed a rise of 215,000 in nonfarm payrolls in March, while the unemployment rate rose to five per cent from an eight-year low of 4.9 per cent as more Americans entered the labour force.
Another report showing the US manufacturing sector resumed growth in March.
“It’s a very solid number overall, but I don’t think it changes anything as far as the Fed’s outlook,” said Jon Adams, a senior investment strategist and portfolio manager at BMO in Chicago.
Wall Street has been concerned about tepid corporate earnings and will keep a close eye on the quarterly reports that start rolling in coming weeks.
Analysts expect S&P 500 companies’ first-quarter earnings to fall seven per cent year over year, with energy companies weighing heavily, according to Thomson Reuters data.
“We don’t think P/E (prices to earnings) ratios are going anywhere,” said Charlie Smith, chief investment officer at Fort Pitt Capital Group, adding that he believes the S&P 500 is fairly valued. “For this year, we think it’s going to be a tough slog.”
The Dow Jones industrial average rose 0.61 per cent to end at 17,792.75 points and the S&P 500 gained 0.63 per cent to 2,072.78,
The Nasdaq Composite added 0.92 per cent to 4,914.54.
For the week, the S&P climbed 1.8 per cent, the Dow added 1.6 per cent and the Nasdaq jumped three per cent.
LONDON – Britain’s top equity index has fallen, dipping at the start of the second quarter of 2016 as weak oil prices weighed on the shares of major energy companies.
The blue-chip FTSE 100 index closed down 0.5 per cent at 6,146.05 points on Friday.
The FTSE and other European stock markets stayed in negative territory after US jobs data was published.
Some traders pointed to the fact that the US unemployment rate increased to 5.0 per cent from an eight-year low of 4.9 per cent as making it more likely that the US may refrain from further interest rate rises in the near future, while also taking the shine off the generally solid-looking US data.
“The US unemployment rate edged up a bit, so you could say that the US jobs numbers were a bit mixed,” said Securequity sales trader Jawaid Afsar.
A drop in oil prices added further pressure to the FTSE 100 by pushing down the shares of BP and Royal Dutch Shell, with investors growing increasingly sceptical that a looming deal to freeze crude production could clear a global glut in the oil market.
The FTSE is down 1.5 per cent since the start of 2016 and 14 per cent below a record high reached last April, with world stock markets having lost ground due to concerns about a China-led global economic slowdown.
HONG KONG – Gloomy Japanese manufacturing data has ensured a downbeat start to the second quarter, driving stocks and oil lower and supporting safe-haven assets like gold and the Japanese yen.
Still bruised from a turbulent first quarter, investors took their cue from the Japanese data on Friday rather than more encouraging figures from China’s manufacturers, before the pivotal US payrolls report later in the day.
Japan’s Nikkei sank 3.5 per cent in its steepest daily fall since mid-February, dragging down shares across Asia.
“Normally, we could expect some sort of upside in the wake of better-than-expected Chinese manufacturing numbers. Certainly if they were poor, we’d be looking at a major downdraft in equities,” said Brenda Kelly, head analyst at London Capital Group. “But the focus appears to be on the negative.”
A profit-dampening rise in the yen and selling by hedge funds for the new financial year weighed on Japanese stocks. But the real blow came from a survey of major manufacturers by the Bank of Japan, which found sentiment at its lowest in nearly three years.
The report crystallised concerns that the BOJ’s shift to negative rates was not working. It also outweighed positive surveys from China that showed factory activity growing for the first time in nine months and a much needed pick-up in services .
MSCI’s broadest index of Asia-Pacific shares outside Japan lost 1.5 per cent.
WELLINGTON – The S&P/NZX 50 lost 44.4 points, or 0.7 per cent, to 6,708.02.
