Stocks in the U.S. rallied to three-month highs, snapping a four-day losing streak, after today’s jobs report was better than anticipated but still left the door open to additional Federal Reserve measures to stoke growth. Markets also appeared more confident the European Central Bank will act to contain the euro zone debt crisis.
The Dow jumped 217.29 points, or 1.69 percent, to close at 13096.17, while the S&P 500 surged 25.99 points, or 1.90 percent, to end at 1390.99. The Nasdaq gained 58.13 points, or 2 percent, to finish the week at 2967.90.
U.S. oil futures topped $91 a barrel for the first time in two weeks, surging over 4 percent to post the biggest one-day gain for oil prices since June 29.
Non-farm payrolls increased by a seasonally adjusted 163,000 jobs in July, after a downwardly revised 64,000 increase in June. The unemployment rate stood at 8.3 percent, up from 8.2 percent in June. This was the 42nd consecutive month of unemployment above 8 percent. Economists had been looking for the creation of about 100,000 new jobs in the month with the unemployment rate holding steady. July average hourly earnings increased 0.1 percent after a June increase of 0.3 percent.
While job creation picked up, an uptick in the unemployment rate keeps the door open for the Federal Reserve to take additional action to further stimulate economic growth.
The Institute for Supply Management’s July non-manufacturing index came in at 52.6 after a June reading of 52.1. A reading above 50 indicates expansion for the services sector.
Market participants also appeared to reconsider ECB chief Mario Draghi's approach to the euro-zone crisis after Thursday's sell off.
Commodity markets appeared to be in the non-believer camp on Thursday night despite a weaker US dollar, but on Friday night they got in on the game. The US dollar index fell another 0.3 percent to 82.61 as the euro rose again, and base metals all jumped 1-3 percent in London.
Gold remains relatively cautious, rising US$7.80 to US$1623.60/oz. Gold had a big move on Thursday night so now its up to the central banks to deliver. On the other hand, the Aussie is loving it from every angle. It has risen another 0.8 percent to US$1.0482.
This week will see all attention focused on anticipation of central bank action, but there will also be a wealth of global economic data releases.
Wednesday is the first of the month and that means manufacturing PMI day, with results from Australia, China, the eurozone, UK and US. Friday sees a repeat performance, with service sector PMIs. It is also jobs week in the US, with the private sector number out on Wednesday ahead of the Fed statement and non-farm payrolls thereafter on the Friday.
The US will also see the Case-Shiller house price index, the Chicago PMI, consumer confidence and personal income and spending on Tuesday. Construction spending and vehicle sales are also out on Wednesday followed by chain store sales and factory orders on Thursday.
It's a big week for data in Australia, providing plenty of scope for RBA consideration in light of whatever the central bank's global counterparts might do. Tomorrow sees building approvals, new home sales and private sector credit. Wednesday it's the PMI and a June quarter house price index, while Thursday brings the RP Data-Rismark house price index for July along with retail sales and the June trade balance. On Friday it's the services PMI.
The US earnings season will now begin its long tail conclusion over the next couple of weeks as it overlaps with the build-up of the Australian six-monthly result season, which features both half and full-year results depending on company accounting periods. The resource sector quarterly reporting season will also wind up the month with a flourish today and tomorrow. On the block are the likes of Beach Energy (BPT) today and Origin Energy (ORG) and Paladin Energy (PDN) tomorrow. Navitas (NVT) will report earnings tomorrow along with Westfield Trust (WRT), and ResMed (RMD) provides the highlight for Friday.