Stocks in the U.S. jumped in a choppy trading session Friday, extending gains heading into the close, after a strong jobs report indicating an improving U.S. economy offset worries about a sooner-than-expected end to Federal Reserve bond buying.
The Dow Jones Industrial Average climbed back above the 15,000 level, finishing at 15,135.84 at the final bell. The S&P500 and the Nasdaq were also strongly higher closing 1% higher to 1,631.89 and 3,479.38 respectively.
The U.S. economy created 195,000 new non-farm payroll jobs in June, the Labour Department reported, after an upwardly revised 195,000 jobs were created in May. The unemployment rate was unchanged at 7.6 percent as more people entered the labour market.
The dollar jumped to a three-year high and 10-year Treasury yields pushed above 2.70 percent given the stronger data and growing anticipation of Fed tapering.
Markets had been awaiting the jobs report for clues as to when the Federal Reserve would begin reducing its bond purchases. The Fed has said it expects to end its $85 billion monthly asset purchases when the unemployment rate drops to around 7 percent.
While the U.S. central bank may be closer to pulling back on the bond purchases, both the European Central Bank and the Bank of England offered forward guidance on policy for the first time, and said record-low interest rates would be maintained for a prolonged period.
In commodity markets, oil prices shot higher, buoyed by optimism for a strengthening U.S. economy after a better-than-expected job growth report. New York�s main contract, West Texas Intermediate (WTI) light sweet crude for August, on Friday surged $US1.98 to $US103.22 a barrel, its highest close since May 2, 2012. In London trade, Brent North Sea crude for delivery in August soared $US2.18 to settle at $US107.72 a barrel.
Gold and silver futures fell as investors feared that an upbeat U.S. jobs report would pave the way for the Federal Reserve to taper off its stimulus efforts. Gold for August delivery, the most active contract, on Friday settled $US39.20, or 3.1 per cent, lower at $US1,212.70 an ounce on the Comex division of the New York Mercantile Exchange. Silver for September delivery fell 96.4 U.S. cents, or 4.9 per cent, to $US18.736 an ounce.
Industrial metals on the London Metal Exchange (LME) closed drastically lower after U.S. jobs data sent the U.S. dollar surging, stoking fears that commodity-supportive U.S. stimulus may be tapered soon. At the close of open-outcry trading, flagship metal copper was 2.3 percent lower than the previous day�s settlement price at $US6,789 a metric ton. Aluminium closed 2.4 percent lower at $US1,768 a ton.
The Aussie dollar was weaker, trading almost a full U.S. cent below Friday's local close. The local unit was buying 90.51 U.S. cents, down from 91.42 U.S. cents. It was also buying 91.61 yen, 70.64 euro cents and 60.79 British pence.
In the week ahead, ANZ job advertisements kicks off the week followed by NAB's monthly business survey for June on Tuesday. Wednesday we can expect Westpac/Melbourne Institute Survey of Consumer Sentiment, Thursday its ABS labour force data for June and Friday rounds off the week with ABS Housing finance for May.
In the U.S., consumer credit data is issued tonight followed by minutes of the FOMC meeting on Wednesday and June PPI and consumer confidence on Friday.