New York: Stocks and bond prices jumped on Friday while the dollar declined after a report showed the US jobs growth was less than expected in August, adding to uncertainty over when the Federal Reserve will begin to trim its massive bond-buying programme.
Gold prices also gained after the payrolls data, which added to signs that the US economic growth may have slowed a bit in the third quarter.
Wall Street stocks briefly retreated in tandem with European shares after Russian President Vladimir Putin pledged to assist Syria. Yet Putin made clear that Russia did not want to be sucked into a war over Syria.
Jitters over a US military strike against Syria remained, and drove up US crude oil futures more than $2 a barrel.
The Fed has said it would begin to reduce its $85 billion a month worth of bond purchases depending on progress in the labour market.
Policymakers were widely expected to make an announcement on the bond programme when they meet on 17-18 September, and the day’s data caused some investors to question whether the Fed would begin to pare back its purchases at that meeting.
Besides a weaker-than-expected payrolls number for August, economists took note of steep downward revisions to the job gains in June and July.
“Today’s data, in combination with Syrian uncertainties, are likely to keep the US Fed on the sidelines for now,” said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York.
Still, Kansas City Fed president Esther George, a consistent hawk who has argued for a tapering in bond purchases all year, said on Friday the Fed should begin reducing monthly bond purchases later this month in order to set monetary policy on a course for “gradual and predictable” normalization.
The dollar fell from a seven-week high against the euro.
The euro was last up 0.4% at $1.3168 and the dollar was down 1.2% against the yen at ¥98.89.
The dollar index was at 82.184, down 0.5%, not far from a recent seven-week peak of 82.671.
On Wall Street, the Dow Jones industrial average was up 15.73 points, or 0.11%, at 14,953.21. The Standard & Poor’s 500 Index was up 3.60 points, or 0.22%, at 1,658.68. The Nasdaq Composite Index was up 6.78 points, or 0.19%, at 3,665.56.
MSCI’s world share index, which tracks 45 countries, was up 0.5%, while the FTSEurofirst 300 ended up 0.5% after briefly trading lower on the Syria headlines.
Bond Prices Rally
The US bond market rallied, with benchmark yields falling back below 3% after the jobs report. Worries over a US military strike against Syria also revived safe-haven demand for bonds.
Benchmark 10-year treasury notes last traded up 19/32 in price, after surging over 1 point moments after the payrolls data. Their yield fell to as low as 2.864% before retracing back to 2.925%.
The 10-year yield had touched 3.007% overnight, a level not seen since July 2011.
Gold, which has benefited from ultra-cheap central bank liquidity, climbed after the data. Gold was up 1.5% at $1,386.74 an ounce.
US crude oil futures rose on concerns a possible strike against Syria woud cause oil prices to spike. The US Congress will vote next week on President Barack Obama’s proposal to launch a missile strike against Syria.
Brent crude oil futures for October delivery rose to settle up 86 cents at $116.12 per barrel, while US crude oil for October delivery jumped $2.16 per barrel to settle at $110.53. Reuters