Stock markets rally on strong US jobs report

[LONDON] Asian and European stock markets rallied Friday, after a record-breaking Wall Street performance, as forecast-busting US jobs figures boosted hopes of bright non-farm payrolls data.

The news propelled London's FTSE 100 to yet another record high at 7,598.99 points in morning deals, before trimming gains ahead of next week's British election.

"The markets are looking pretty buoyant ... boosted by the prospect of this afternoon's non-farm jobs report," noted Spreadex analyst Connor Campbell.

But oil tumbled on concerns of a ramp-up in fossil-fuel production following President Donald Trump's controversial decision to withdraw the United States from the Paris climate agreement.

While there are concerns about the future of Mr Trump's economic agenda, strong data have taken the front seat in driving global equity gains in recent weeks, pushing them to multi-year highs.

And that advance was given a bump higher Thursday when payrolls firm ADP said the world's biggest economy created more than a quarter of a million jobs in May, far more than expected and boosting hopes for government jobs figures due Friday.

A healthy reading in the non-farm payrolls report will likely be the rubber stamp the Federal Reserve needs to hike interest rates again later this month, with traders hoping for forward guidance on its plans for the future.

"It is another indication that the US labour market is the brightest spot in the US economy," said Greg McKenna, chief market strategist at AxiTrader.

"Assuming non-farms is strong again ... then it's likely the US Federal Reserve will be emboldened with the view that jobs growth will ultimately lead to wages growth which will lead to inflation." Asian equities meanwhile headed into the weekend with another round of gains, following a record close for all three major New York indices.

Aside from oil prices, there appeared to be little major impact from Trump's climate agreement withdrawal.

"As global leaders decried Donald Trump's decision to withdraw the US from the Paris climate accord, investors were quietly pumping funds into the stock market," said CMC Markets analyst Jasper Lawler.

"Dumping the climate deal has not really hurt of hindered investor appetite for risk.

"If anything, The Donald taking a difficult decision to fulfil a campaign pledge is welcome if the same can be done with respect to tax policy." The pound was on traders' minds with less than a week until Britain's general election, and has fallen in recent days following a polls surge for the opposition Labour Party.

Prime Minister Theresa May's ruling conservative party is nevertheless widely expected to win.

REUTERS