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Wall Street stocks rally after strong US jobs report

US stocks jumped at the opening bell after a strong jobs report fuelled hopes that the world’s largest economy is on track for a recovery from the damage caused by the coronavirus pandemic despite a recent rollback in lockdowns.

US employers added 4.8m jobs in June and the unemployment rate dropped to 11.1 per cent from 13.3 per cent in May, the second consecutive month that the figures have beaten expectations after a fall of more than 20m jobs in April.

The Wall Street benchmark S&P 500 index rose 1.2 per cent at the opening bell, taking its gains for the week to 4.7 per cent. The tech-weighted Nasdaq Composite opened up 1.1 per cent.

US government debt came under modest selling pressure, pushing the yield on the 10-year Treasury up 0.024 percentage points to 0.705 per cent.

The jobs figures have breathed new life into an already bullish week for equity markets, which have been boosted by signs of economic recovery and developments towards a potential Covid-19 vaccine. But the gains have come against the backdrop of a deteriorating situation in the US, where the spread of the virus has led several states to put their economic openings into reverse.

“There is continued risk that a second wave could be reverse some of these job gains in July, but that should not take away from the strength of the June data,” economists at US bank Jefferies said.

Mike Bell, global market strategist at JPMorgan Asset Management, said the jobs figures would “normally be an unambiguously positive sign that the economic recovery is under way,” but warned that the rise in infections complicated the picture. The jobs figures were collated in the second week of last month, before the recent spike in infections.

“The rebound in employment is unfortunately being accompanied by a sharp rise in new infections in the US, which was of course what caused the initial collapse in employment in the first place,” he said.

London’s FTSE 100 rose 1.5 per cent in afternoon trading, while the regional benchmark Stoxx 600 added 1.7 per cent. Shares in Asia-Pacific traded around their highest levels in four months, as MSCI’s broad index of Asian shares ex-Japan gained 1.8 per cent.

Coronavirus is not the only concern for global investors. China’s move to impose national security legislation on semi-autonomous Hong Kong — which has drawn international condemnation — also risks a new flare-up in geopolitical tensions.

However, “financial markets overall appeared to have digested both the [national security law] and related international responses after their initial reactions”, said Adrienne Lui, an economist at Citi.

Oil prices rose. Brent crude, the international benchmark, gained 1.1 per cent to $42.50 a barrel, while US marker West Texas Intermediate rose by the same margin to just over $40.

Additional reporting by James Politi in Washington and Adam Samson in London

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