The latest jobs report showed the US economy is so far proving resilient in the face of higher interest rates
Stock markets and oil prices rallied Friday on hopes China would roll back some of its economically-painful policies surrounding Covid.
Equities also got a boost from the latest US jobs data, which raised hopes of a soft landing of the economy despite rising interest rates.
“Stocks jumped in anticipation that the Chinese government would relax its zero-Covid policy from March next year,” noted Russ Mould, investment director at AJ Bell.
All three of Europe’s top indices were up by at least two percent in afternoon trading.
Wall Street stocks also shot higher at the opening bell, with the Dow climbing 1.1 percent.
The optimism also lifted oil prices by more than four percent as traders eyed rising demand for crude on the news out of China.
In foreign exchange, the dollar slid more than one percent against the euro despite the prospect of higher US interest rates.
The pound also won back some ground against the dollar, rising one percent a day after tumbling as the Bank of England said the UK economy could face a two-year-long recession that it believes has already begun.
The BoE on Thursday also lifted its main interest rate by 0.75 percentage points, the most in 33 years in efforts to contain runaway inflation.
The week also saw the Federal Reserve hike its key rate by the same amount, as central banks try to cool decades-high inflation.
The Fed has pointed to a still-strong labour market as a key reason for not shifting from aggressive rate-tightening.
The addition of 261,000 jobs last month, far more than economists had forecast, will likely reinforce the determination of policymakers to continue the hawkish policy.
That would normally see equities tumble as higher interest rates are bad for most businesses.
But the figures are “consistent with achieving a soft landing for the economy”, said market analyst Patrick O’Hare at Briefing.com.
Fed Chair Jerome Powell has indicated that the central bank is willing to push the US economy into recession if necessary to tame inflation.
– Key figures around 1330 GMT –
London – FTSE 100: UP 2.0 percent at 7,334.50 points
Frankfurt – DAX: UP 2.2 percent at 13,448.66
Paris – CAC 40: UP 2.9 percent at 6,421.61
EURO STOXX 50: UP 2.6 percent at 3,686.05
New York – Dow: UP 1.1 percent at 32,358.37
Tokyo – Nikkei 225: DOWN 1.7 percent at 27,199.74 (close)
Hong Kong – Hang Seng Index: UP 5.4 percent at 16,161.14 (close)
Shanghai – Composite: UP 2.4 percent at 3,070.80 (close)
Pound/dollar: UP at $1.1279 from $1.1160 Thursday
Euro/dollar: UP at $0.9865 from $0.9751
Dollar/yen: DOWN at 147.11 yen from 148.25 yen
Euro/pound: DOWN at 87.52 pence from 87.73 pence
Brent North Sea crude: UP 3.9 percent at $98.36 per barrel
West Texas Intermediate: UP 4.5 percent at $92.13 per barrel
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