World markets climb after soft American employment figures calm inflation worries

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Stocks rose Monday as investors pared their bets on a Federal Reserve interest rate hike after data showed thousands of US jobs were lost in July, though another spike in oil prices dented sentiment.

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Tech firms enjoyed a fresh bout of buying following a volatile run in recent weeks, with Japanese and Korean chipmakers leading the charge.

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The positive mood was fuelled by figures from the US Bureau of Labour Statistics showing that 23,000 jobs were lost last month, while growth in May and June was revised downward.

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The reading suggested the world’s number one economy was slowing, though traders welcomed the prospect that the Federal Reserve will hold off hiking borrowing costs for the time being.

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The chances of an increase in September were slashed to about 43 per cent from 64 per cent a week ago, according to Bloomberg.

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Inflation data due later this week will be the next guide for investors.

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The news helped Wall Street higher, with the S&P 500 ending at a fresh record high, while tech firms — which benefit from lower rates — helped the Nasdaq pile on more than one per cent.

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And the gains filtered through to Asia, with Tokyo climbing more than two per cent thanks to healthy advances for Tokyo Electron and Advantest.

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Seoul was also up, along with Hong Kong, Taipei, Shanghai, Wellington, Mumbai, Bangkok and Jakarta.

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London dipped at the open while Paris and Frankfurt edged higher.

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“Markets treated the report as a meaningful challenge to near-term Fed rate hike expectations, effectively concluding the Fed has time on its side,” wrote National Australia Bank’s Rodrigo Catril.

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But he added: “The report reduces the case that the labour market is adding inflation pressures, but it does not provide a clean green light for a dovish pivot.

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“The report is unlikely, by itself, to deter a September hike… inflation remains the more pressing side of the mandate. The next (consumer price index) prints (for July and August) ahead of the September Federal Open Market Committee meeting are the key data releases to watch.”

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And DWS chief US economist Christian Scherrmann said: “The report sent a clear dovish message to central bankers. A simultaneous decrease in labor demand and supply usually signals a slowdown in economic activity.”

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The dollar clawed back the losses suffered Friday in reaction to the jobs figures, and continued to gain against the yen after plunging earlier this month when US and Japanese authorities embarked on a historic joint intervention to support the Japanese unit.

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Crude prices extended gains seen at the end of last week as Iran’s Revolutionary Guards insisted Sunday that they would not reopen the Strait of Hormuz until the United States complied with a list of demands.

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Tehran insists on retaining control of the waterway — through which a fifth of world oil and LNG pass — after the war and wants to charge tolls for passage, which Washington has pushed back against.

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Attacks in the strait, which was free to transit before the war, led to the collapse of an April ceasefire, and mediators have urged both sides to return to the terms of a subsequent June memorandum that set out a path for peace talks.

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Iran on Saturday released a list of conditions for reopening the strait, including an end to the war on all fronts, the lifting of a US counterblockade of Iranian ports, the end of sanctions, the release of frozen assets, and compensation for wartime damage, the Tasnim news agency reported.

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Those conditions echoed the terms of the June agreement, which included a provision to create a $300 billion reconstruction fund for Iran.

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Iran’s Revolutionary Guards said on Sunday that their strategy was to maintain their blockade “until the enemy accepts all our conditions… the strait is now actually a theatre of war for us and not just a waterway”.

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For his part, US President Donald Trump said in an interview: “We are low-keying it.”

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“We are only semi-negotiating with them,” he was quoted as saying. “We are just watching Iran with its huge inflation and the fact they have no money.”

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“It will work out,” he added. “It’s like a chess game.”

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Key figures around 0715 GMT include, Tokyo – Nikkei 225: UP 2.1 per cent at 66,970.22 (close), Hong Kong – Hang Seng Index: UP 0.9 per cent at 25,898.18, Shanghai – Composite: UP 0.7 per cent at 3,966.59 (close), London – FTSE 100: DOWN 0.1 per cent at 10,895.43, Euro/dollar: DOWN at $1.1554 from $1.1567 on Friday, Pound/dollar: DOWN at $1.3494 from $1.3499, Dollar/yen: UP at 158.44 yen from 157.50 yen, Euro/pound: DOWN at 85.62 pence from 85.68 pence, West Texas Intermediate: UP 0.5 per cent at $78.54 per barrel, Brent North Sea Crude: UP 0.7 per cent at $84.10 per barrel, New York – DOW: UP 0.3 per cent at 54,036.93 (close).

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AFP

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