Dollar, global stocks rise as U.S. jobs data boosts taper talk

NEW YORK Fri Dec 6, 2013 4:21pm EST

1 of 6. A trader works on the floor of the New York Stock Exchange during the opening bell in New York, November 27, 2013.

Credit: Reuters/Carlo Allegri

NEW YORK (Reuters) - Global equity markets surged and the dollar rose against the yen on Friday after stronger-than-expected U.S. jobs data gave investors confidence the economy is strong enough to withstand an expected reduction in Federal Reserve stimulus.

The Labor Department's monthly report on the main U.S. employment indicator -- nonfarm payrolls -- bolstered the view that the jobs market in the world's biggest economy is on the mend and that the Fed will soon begin reducing its stimulus.

The debate over when the Fed will start to reduce the flow of cheap money has dominated markets worldwide for months.

A total of 203,000 jobs were added in November, beating expectations for 180,000, while the unemployment rate dropped three-tenths of a percentage point to a five-year low of 7 percent.

The dollar jumped to session highs against the yen and stocks on Wall Street surged, with the Nasdaq setting a record intraday high for the year and the Dow and S&P rising more than 1 percent.

"I don't think the Fed is in a big rush to do anything drastic in the absence of inflation. A few strong jobs numbers do not mean we are out of the woods," said Michael Marrale, head of research, sales and trading at ITG in New York.

"That said, we are in a very good spot and we can offset growth with tapering and we come out of this in one piece."

Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York, said that rising incomes stand out as even more important than the job gains.

"Wages are strongly driving consumption in this cycle more than any other time. Overall wage gains were the most compelling news in this data," Porcelli said.

The dollar index .DXY, which tracks the greenback versus a basket of six currencies, rose 0.05 percent to 80.277.

Against the yen, the dollar was last up 1.06 percent at 102.86 yen. The dollar's gains versus the euro were short-lived, as the euro zone common currency was boosted by rising short-term interest rates a day after the European Central Bank dampened hopes for an imminent easing move. <MMT/>

The euro was up 0.25 percent against the dollar to $1.3701.

Other data also was bullish for stocks. Consumer spending increased 0.3 percent in October, or one-tenth of a percentage point more than expected, after rising 0.2 percent in September.

The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment jumped to 82.5 for December, up from a final reading of 75.1 in November. This was the highest reading for the index since July and topped analysts' forecasts for a reading of 76.

MSCI's all-country world equity index .MIWD00000PUS, which tracks shares in 45 nations, rose 0.81 percent, while the pan-European FTSEurofirst 300 index .FTEU3 gained 0.72 percent to close at 1,270.38.

The Dow Jones industrial average .DJI rose 198.69 points, or 1.26 percent, to 16,020.2. The S&P 500 .SPX gained 20.06 points, or 1.12 percent, to 1,805.09 and the Nasdaq Composite .IXIC added 29.356 points, or 0.73 percent, to 4,062.521.

U.S. Treasury yields, a benchmark for borrowing costs around the world, briefly climbed above 2.9 percent, and later the 10-year note was up 2/32 in price to yield 2.8553 percent.

Bund futures settled up 22 ticks at 140.11 euros.

U.S. gold futures for February delivery underperformed spot prices, to settle down $2.90 at $1,229.

Brent crude settled up 0.63 percent at $111.61 a barrel. U.S. crude settled up 27 cents at $97.65 a barrel.

(Reporting by Herbert Lash; Additional reporting by Marc Jones in London; Editing by James Dalgleish, Leslie Adler and Chizu Nomiyama)

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Comments (5)
An increase in Jobs at McDonalds replacing manufacturing jobs sent overseas should get the markets right back up there!!

Dec 05, 2013 9:17pm EST  --  Report as abuse
Afrodo wrote:
Global shares seem more attractive today…for some.~(Those who hesitate sometimes win).~But,a bigger than expected France’s government deficit $ England’s high inflation on house prices, will bring the higher interest+ taxes, like dark-dark clouds, on their horizons. I speculate not today.

Dec 06, 2013 5:23am EST  --  Report as abuse
MikeBarnett wrote:
Have any of these investors ever heard of Halloween, Thanksgiving, and, most of all, Christmas? Of course, there will be more hiring in the months of the fourth quarter. It happens every year. Unfortunately, this Christmas shopping season started with one less shopping weekend, and this weekend’s ice and snow will shorten the season again. It will also cause higher consumer heating bills, but those won’t appear until January, so few will save for them.

In addition, Obamacare will take a minimum of $1260 per year from every person in the US. $400 billion per year or 2.5% of US annual GDP will not be available to spend. US GDP growth must grow more than 2.5% per year or US GDP will decline for that year. Given US economic performance for the past decade, US GDP “growth” may be negative for several years.

With these two problems, there is no reason for the US stock markets to rise.

Dec 06, 2013 1:12pm EST  --  Report as abuse
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