World stocks higher as jobs report shrugged off
AP and AFP
January 14, 2014, 12:03 am TWN
BEIJING/HONG KONG--World stock markets were mostly higher Monday as investors shrugged off weak U.S. employment figures and looked forward with optimism to earnings season.
In Europe, France's CAC-40 added 0.1 percent to 4,254 and Britain's FTSE 100 rose 0.1 percent to 6,748.05. Germany's DAX was little changed at 9.476.14.
On Wall Street, the futures for the Dow Jones Industrial average and Standard & Poor's 500 index both fell by 0.1 percent.
Markets quickly dismissed Friday's unexpectedly weak data showing a sharp decline in hiring by American companies last month. Analysts said it was a fluke, due partly to bitterly cold weather, following weeks of data showing the U.S. economy improving.
“We see no convincing evidence that the weakness represents the start of a trend,” said Jim O'Sullivan of High-Frequency Economics in a report.
Analysts said there was little chance the jobs numbers might prompt the Fed to reconsider its plans to wind down stimulus.
The Fed has been buying US$85 billion of bonds per month to force down interest rates and spur economic growth, helping to buoy stock prices. The Fed said in December it would reduce its purchases by US$10 billion per month to US$75 billion beginning this month due to an improving economy.
Kelly Teoh, market strategist at IG Markets Singapore, told AFP: “It has given a lot of people the idea that the pace of reducing stimulus will be decreased. So that risk of a faster pace of tapering has been taken away.”
While the result came as a surprise, some analysts said it was likely just a blip and could be explained by firms not hiring due to the severe cold weather seen in the country in recent weeks.
Investors elsewhere were encouraged as they looked ahead to U.S. corporate earnings due to be reported in coming weeks.
“Expectations are fairly buoyant,” said Evan Lucas of Australia's IG Markets in a report. He said expectations are for a 9 percent increase in profits due to improved economic conditions.
The U.S. jobs data Friday showed companies added 74,000 workers in December, the smallest increase since January 2011. The unemployment rate fell by 0.3 percentage points to 6.7 percent, but that was largely due to people dropping out of the labor force.