US stocks, dollar rise after jobs report; treasuries advance

New York: The US stocks climbed with the dollar after a report showed hiring rose more than forecast last month. Treasury yields dropped on speculation the pace of recovery won’t accelerate the timing of Federal Reserve rate increases.

The Standard & Poor’s 500 Index added 0.3% at 10:20 am in New York. The dollar rose 0.2% versus the euro. The yield on the 10-year treasury note fell two basis points to 2.56%. Rates on similar maturity Italian bonds slid 18 basis points to 2.76% as European yields fell to records after the region’s central bank added stimulus. The Stoxx Europe 600 Index climbed 0.6%. Russian equities advanced as President Vladimir Putin met with Ukraine’s leader in France. Copper slid 1.7%.

The US employers added 217,000 workers in May, sending payrolls past the pre-recession peak for the first time as the economy gained traction. Yields on Spanish, Belgian and Irish 10-year securities fell to all-time lows a day after the European Central Bank (ECB) took deposit rates negative, the first major central bank to do so, and offered liquidity to lenders to encourage credit growth.

“The market likes this steady state of economic improvement,” Timothy Ghriskey, chief investment officer at Solaris Asset Management LLC in New York, which helps manage about $1.5 billion in assets, said in a phone interview. “A really weak number would raise economic concerns that the economy is rolling over, and a too-strong number would cause concern about the Fed accelerating its tightening timetable. It’s a sweet spot for the market.”

Payroll Data

Non-farm payrolls increased by 217,000 in May, versus 282,000 in April and a gain of 215,000 projected by economists in a Bloomberg survey. The unemployment rate held at 6.3%. The share of working-age people in the labour force matched a 36-year low, suggesting the recovery remains uneven.

Fed officials are watching the labour market as they move to complete their bond-purchase programme late this year and start considering the timing of the first interest-rate increase since 2006. Central-bank stimulus has helped propel the S&P 500 higher by as much as 187% from its bear-market low in March 2009. The index has added 1.2% in the past five days and is poised for a third straight weekly gain.

“The data was surprisingly right on the line,” Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen Ball & Associates in Bethlehem, Pennsylvania, said in a phone interview. “It painted a portrait of an economy that’s growing, albeit gradually—not too fast, not too slow. The markets have risen this week in anticipation of this, plus what happened overseas with the ECB rate movement.”

Monetary Accommodation

Fed chair Janet Yellen said on 7 May that a high degree of monetary accommodation remains warranted, and that there will be considerable time before the central bank raises its benchmark rate as slack in the jobs market keeps inflation below its 2% target.

Benchmark 10-year yields fell as the labour participation rate remained at the lowest since March 1978. The rate rose as high as 2.64% on Thursday, the most since 13 May.

Spain’s 10-year yields fell 17 basis points, or 0.17 percentage point, to 2.66%, the least since Bloomberg began compiling the data in 1993.

French five-year yields dropped to a record 0.53%, while Irish 10-year rates dropped to as low as 2.46% and the yield on similar-maturity Belgian bonds touched 1.80%.

“Even as the Fed has started to tighten its monetary policy, the rest of world is still easing,” Jerry Braakman, chief investment officer of First American Trust in Santa Ana, California, said by phone. His firm oversees $1.1 billion. “You still have a lot of central bank liquidity being pumped into the system. There is more upside than downside in the market now.”

Putin Meeting

Three shares advanced for every one that declined on the Stoxx 600, with trading volumes 29% higher than the 30-day average, according to data compiled by Bloomberg.

The MSCI Emerging Markets Index added 0.7%, extending this week’s gain to 0.9%. The Micex Index rose 0.9%, headed for its best week in a month, after Putin held his first talks with Ukraine’s newly elected president, Petro Poroshenko, as France used the backdrop of D-Day commemorations to ease tensions over the separatist unrest in eastern Ukraine.

India’s S&P BSE Sensex climbing 1.5% to a record and Turkey’s benchmark gauge headed for its third weekly advance. Malaysia’s ringgit gained 0.5% against the dollar and Poland’s zloty advanced 0.4% versus the euro.

Hong Kong’s Hang Seng Index slipped 0.2%, erasing a weekly gain and the Shanghai Composite Index retreated 0.5%. The yuan traded in Hong Kong jumped the most in a week after the central bank raised the currency’s daily fixing by the most in five months.

China, Copper

The International Monetary Fund (IMF) said on Thursday China’s policy makers still have tools to keep economic growth at a medium to high level. Trade data on 8 June may show exports climbed 6.7% from a year earlier in May, more than April’s 0.9% growth, according to the median estimate in a Bloomberg News survey.

Copper dropped for a fourth day, the longest streak since 3 March, to the lowest since 8 May. An investigation of metals storage at China’s Qingdao port will make banks cautious about commodity financing, and any lending curbs might weigh on copper, according to Macquarie Group Ltd. Bloomberg

Will Hadfield, Claudia Carpenter, Michael Shanahan, Paul Dobson, Lucy Meakin and Stephen Kirkland in London, Emma O’Brien in Wellington and Nick Gentle in Hong Kong also contributed to this story.