Forecast-busting US jobs data reinforce Fed tapering speculation but stocks remain solid
LONDON (AP) -- Markets took in stride forecast-busting U.S. jobs data Friday even though they reinforced expectations that the Federal Reserve will begin to reduce its monetary stimulus this month.
News that the U.S. economy generated 203,000 jobs in November, above expectations for 180,000, and that the unemployment rate fell to 7.0 percent from 7.3 percent show that the U.S. economy is gaining traction.
"This is a solid across-the-board jobs report that is consistent with gathering upward momentum in the U.S. economy," said Neil MacKinnon, global macro strategist at VTB Capital. "From the markets point of view, the jobs report is not an impediment to an early tapering."
In Europe, the FTSE 100 index of leading British shares was up 0.5 percent at 6,530 while Germany's DAX rose 0.7 percent to 9,146. The CAC-40 in France was 0.4 percent higher at 4,116.
Wall Street looked headed for a solid opening, with Dow futures and the broader S&P 500 futures up 0.7 percent.
A run of strong economic data this week had already cemented forecasts that the Fed would back a so-called tapering of its $85 billion in monthly financial asset purchases. Earlier this year, fears of the stimulus withdrawal had caused jitters in the markets as the monetary injection has helped to shore up stocks for several years. Now, though, investors are increasingly focusing on the improvements in the world's largest economy.
The dollar edged higher after the payrolls figures as any reduction in the stimulus will reduce the amount of dollars in circulation - the euro was down 0.2 percent at $1.3641 while the dollar rose 1 percent to 102.79 yen.
Earlier in Asia, Japan's Nikkei 225 stock average rose 0.8 percent to 15,299.86 and Hong Kong's Hang Seng added 0.1 percent to 23,743.10. China's Shanghai Composite dropped 0.4 percent to 2,237.11 and Australia's S&P/ASX 200 fell 0.2 percent to 5,186.