Volkswacht Bodensee - Stocks rise after bumper US jobs report, debt breakthrough

The stronger-than-expected employment data released Friday morning suggests the US economy remains resilient despite concerted action from the Federal Reserve to suppress demand and bring down high inflation.

The passage of a debt limit deal through both houses of Congress appears to have eased market fears of a debt default as well, with Wall Street's "fear gauge" sinking to its lowest level since before the Covid-19 pandemic.

The US dollar strengthened against rival currencies as foreign exchange traders digested the news, while Asian and European stocks also closed in the green Friday.

"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," he added.

Official data released 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, signaling a persistently strong labor market.

The debt deal and the "Goldilocks" jobs report -- neither too good nor too bad -- suggests the US economy "is not facing an immediate risk of a recession," Edward Jones investment strategist Angelo Kourkafas told AFP.

- Fed under pressure -

Monetary policy officials have said a softer labor market and much lower inflation were key to the central bank being able to stop lifting borrowing costs.

Analysts had expected the Fed to relent on more than a year of interest rate hikes aimed at curbing historically high inflation if jobs market numbers cooled.

But Friday's job data drew different reactions, with some predicting the Fed is now under more pressure to increase interest rates later this month, while others suggested it can still afford to skip a hike this time around.

The higher-than-expected job creation figures "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 when it next meets," he added.

But Kourkafas of Edward Jones said the "mixed" jobs report "suggests that they could possibly skip a hike in June and deliver more tightening if needed later in the year."

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.

- Key figures around 2100 GMT -

New York - Dow: UP 2.1 percent at 33,762.76 points (close)

New York - S&P 500: UP 1.5 percent at 4,282.37 (close)

New York - Nasdaq: UP 1.1 percent at 13,240.76 (close)

London - FTSE 100: UP 1.6 percent at 7,607.28 (close)

Paris - CAC 40: UP 1.9 percent at 7,270.69 (close)

Frankfurt - DAX: UP 1.3 percent at 16,051.23 (close)

EURO STOXX 50: UP 1.6 percent at 4,323.52 (close)

Tokyo - Nikkei 225: UP 1.2 percent at 31,524.22 (close)

Hong Kong - Hang Seng Index: UP 4.0 percent at 18,949.94 (close)

Shanghai - Composite: UP 0.8 percent at 3,230.07 (close)

Euro/dollar: DOWN at $1.0709 from $1.0762 on Thursday

Dollar/yen: UP at 139.97 yen from 138.80 yen

Pound/dollar: DOWN at $1.2448 from $1.2526

Euro/pound: UP at 86.01 pence from 85.91 pence

Brent North Sea crude: UP 2.5 percent at $76.13 per barrel

West Texas Intermediate: UP 2.3 percent at $71.74 per barrel

O.Krause--BTB