By Harry Robertson
LONDON (Reuters) -Global stocks extended their gains on Friday after data showed the U.S. economy added fewer jobs than expected in October, bolstering investors’ hopes that the Federal Reserve is finished hiking interest rates.
The dollar tumbled after the data, which showed that the U.S. nonfarm payrolls rose by 150,000 in October, lower than the 180,000 predicted and September’s downwardly revised 297,000 figure.
Equities remained on track for their biggest weekly rise in a year after the Fed left interest rates steady for a second meeting running on Wednesday and the Bank of England followed suit on Thursday, helping bond yields to tumble.
MSCI’s index of world stocks was last up 0.45%, having traded roughly 0.26% higher before the data. It was on track to finish the week 4.5% higher, which would be the largest weekly rise since November 2022.
The dollar index, which tracks the currency against its major peers, was last down 0.74% at 105.45. It traded 0.29% lower at 105.89 before the data.
Futures for the S&P 500 stock index rose and were last up 0.37%, after the index jumped 1.9% the previous day.
“Investors will interpret today’s jobs weak jobs report as a sign that demand is slowing in the labour market,” said Richard Flynn, managing director at Charles Schwab UK, in emailed comments.
“For central bankers, a loosening labour market is another reason to lean away from further interest rate hikes – something investors might view as a silver lining.”
Europe’s benchmark Stoxx 600 equity index was up 0.25% on Friday, after trading around 0.1% higher before the nonfarm payrolls. It was set for a weekly increase of 3.5%.
The 10-year U.S. Treasury yield was last down 10 basis points (bps) at 4.572%, having traded 3 bps lower at 4.639% previously.
The yield, the reference for borrowing rates around the world, dropped 20 basis points over the Wednesday and Thursday sessions after the Fed and BoE meetings.
Central bank officials stressed that more may need to be done to tackle inflation, but many investors believe the next move in borrowing costs is likely to be down.
“Once the market can become convinced that all these central banks are on hold … that can encourage bond yields to move lower,” said Samuel Zief, head of global FX strategy at JPMorgan Private Bank.
A decision on Wednesday by the U.S. Treasury to issue less long-term debt than expected also fuelled the rally in bonds, as did data on Thursday suggesting the U.S. economy might finally be cooling.
Oil prices were down for the week, in part because the Israel-Hamas war has not widened as some feared. Brent crude oil futures were 3.4% lower since Monday at $87.33 a barrel, although were up 0.5% on Friday.
(Reporting by Harry Robertson; editing by Jacqueline Wong, Miral Fahmy, Mark Heinrich and Alison Williams)
