TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Stocks rise on US debt breakthrough, jobs data
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
People walk outside the Bank of England in the City of London financial district in London on May 11, 2023. (Reuters/Henry Nicholls)
S
tocks markets rallied on Friday after senators voted to lift the US debt ceiling and as strong jobs data eased fears for the world's top economy.
Wall Street opened in the green following the jobs report after Asian and European stocks had leapt as investors welcomed news that the United States would not run out of money to pay its bills.
Hammered out between Democratic President Joe Biden and the Republicans, the measure passed the Senate on Thursday a day after it had sailed through the House of Representatives, ending months of wrangling and the threat of a potentially catastrophic default.
"The Senate swiftly approved the new debt ceiling deal in the US prompting relief in the markets," said AJ Bell investment director Russ Mould.
"A bigger bounce might have been forthcoming had investors not already been very much factoring in an agreement, with only a modest sell-off around the crisis."
Official data released on Friday showed that the United States added 339,000 jobs in May even as the unemployment rate climbed to 3.7 percent and wage gains fell, signalling a persistently strong labour market.
Analysts had expected the Fed to relent on more than a year of interest rate hikes aimed at curbing historically high inflation if the labour market numbers cooled.
The hiring figures will ease concerns about the economy "suffering a hard landing", while the unemployment numbers will assuage some Fed worries about wage inflation and the tightness of the jobs market, said Briefing.com analyst Patrick O'Hare.
"It was a report that was the best of both worlds," he added.
- Fed pressure -
But the jobs data, which exceeded expectations and represented an increase on the equivalent figure for April, may push the Fed to hike rates again later this month.
Monetary policy officials have said a softer labour market and much lower inflation were key to the central bank being able to stop lifting borrowing costs.
"The higher-than-expected reading for non-farm payrolls in May... will add pressure on the Federal Reserve to continue its path of increasing rates," said Srijan Katyal at the international brokerage ADSS.
"It's likely that the Federal Reserve will raise interest rates by at least 25 basis points in when it next meets."
Oil prices meanwhile jumped as traders eyed a weekend output meeting of the OPEC+ grouping of crude producers.
London stocks were also lifted after pet care firm Dechra Pharmaceuticals agreed to a £4.5-billion ($5.6-billion) takeover by Swedish private equity firm EQT and the Abu Dhabi Investment Authority.
