Market cheers bad news, eyes Fed moves

STOCKS finished a losing week on a high note after a soft jobs report diminished the odds of a Federal Reserve rate hike. The rebound could continue this week if investors are convinced that the central bank will stay on hold through the summer.

The positive response to negative jobs data was a stark reminder that we live in a world where central-bank policy is paramount to the market outlook. That means the confusion that has reigned in markets for 2016 is likely to last.

In April, the US economy added only 160,000 jobs, hardly enough to keep up with the rate of population growth, even as the official unemployment rate held steady at a healthy 5 per cent. The silver lining in the gloomy report was one of the biggest increases in wage inflation during the current recovery. Increases in the minimum wage in the Walmart supermarket chain and in cities such as Seattle are finally having an effect.