In US economic data, non-farm payrolls (employment) rose by 248,000 in September, above forecasts centred on a gain of 215,000. The unemployment rate fell from 6.1 per cent to a 6-year low of 5.9 per cent. The average workweek rose from 34.5 hours to 34.6 hours. The ISM services index eased from 59.6 to 58.6 in September, broadly in line with forecasts.
European shares rose on Friday. Airlines were buoyed by lower oil prices while exporters benefitted from a weaker Euro. The FTSEurofirst 300 index rose by 0.9 per cent while the UK FTSE rose by 1.3 per cent. The German market was closed for a holiday. And Australia's major miners were weaker in London trade with shares in BHP Billiton down by 1.0 per cent while Rio Tinto fell by 1.3 per cent.
US sharemarkets posted solid gains on Friday with investors hopeful that higher employment will lead to stronger consumer spending and housing activity. The Dow Jones index rose by just over 208 points or 1.2 per cent while the broader S&P 500 index was up by 1.1 per cent and the Nasdaq gained 45 points or 1.0 per cent. Over the week the Dow Jones fell by 0.6 per cent while the S&P 500 and Nasdaq both fell by 0.8 per cent.
US long-term treasury prices fell on Friday (yields higher) in response to solid jobs data, although traders exercised caution ahead of new bond supply. The US Treasury will sell $27 billion in three-year notes on Tuesday, $21 billion in 10-year notes on Wednesday and $13 billion in 30-year bonds on Thursday. US two-year yields rose by 3 points to 0.564 per cent while US 10-year yields rose by 1 point to 2.436 per cent. Over the week US two-year yields fell by 2 points while 10-year yields fell by over 4 points.
Major currencies fell against the greenback over the European and US sessions on Friday after the US jobs data. The Euro fell from highs near $US1.2655 to lows near $US1.2500, ending US trade near $US1.2515. The Aussie dollar fell from highs near US88.00c to lows around US86.45c before ending the US session near US86.75c. The Japanese yen firmed from ¥108.65 per US dollar to ¥109.91, ending US trade near ¥109.75.
World oil prices fell on Friday. A higher US dollar crimped prices although stronger US jobs data points to higher oil demand. Brent crude fell by $US1.11 or 1.2 per cent to a 27-month low of $US92.31 a barrel while the US Nymex crude price fell by $US1.27 or 1.4 per cent a barrel to $US89.74 a barrel. Over the week Brent fell by $US4.69 or 4.8 per cent while Nymex lost $US3.80 or 4.1 per cent.
Base metal prices rose by up to 3.3 per cent on Friday with nickel leading the gains. But lead bucked the trend, down by 0.1 per cent. Over the week prices fell up to 2.6 per cent but lead rose 0.4 per cent while zinc was unchanged. Gold prices fell on Friday with the Comex gold futures quote down by $US22.20 an ounce or 1.8 per cent to $US1,192.90 per ounce. Over the week gold fell by $US22.50 or 1.9 per cent. Iron ore rose by US10c a tonne or 0.1 per cent on Friday to $US78.90 a tonne. Over the week, iron ore rose by 30c.
Ahead: It should be a subdued start to the week with public holidays in a number of states. While US and European markets rose, oil and gold prices fell and that will put pressure on resources stocks. A generally flat start is tipped for the ASX 200. In Australia, the inflation gauge and job advertisements data are released. In the US, the Federal Reserve Chair appears before the Financial Stability Oversight Council meeting.
Craig James is chief economist at Commsec.