LONDON: Europe’s main stock markets leapt higher yesterday, boosted by a surprise drop in the US unemployment rate and on the back of upbeat comments from European Central Bank chief Mario Draghi.
At the close, London’s FTSE 100 index of leading companies was 0.74 percent higher at 5,871.02 points. In Frankfurt, the Dax 30 rose by 1.27 percent to 7,397.87 points, while in Paris the CAC 40 jumped by 1.64 percent to 3,457.04 points. Madrid’s IBEX 35 index increased by 1.81 percent to 7,954.40 points despite lingering concern over a potential bailout of debt-ridden Spain.
“The US jobless figures were the catalyst for the rise on markets. These figures show us that the situation in the United States isn’t that bad,” said Alexandre Baradez, analyst at Saxo Bank in Paris.
Wall Street also gained on the solid September US jobs data that, after revisions to previous months, pulled the unemployment level down to 7.8 percent, the lowest since January 2009. In midday trading, the Dow Jones Industrial Average rose 0.37 percent, the S&P 500 gained 0.43 percent and the tech-rich Nasdaq Composite moved up 0.15 percent.
The Labour Department data for September showed a poor 114,000 net new jobs produced, but previous months were revised higher and, when combined with a rise in labour market dropouts, the official rate fell from the previous 8.1 percent.
“While the media may be concentrating on the fact that payroll levels deteriorated in September, the underlying trends in the data were extremely positive,” said Briefing.com.
The euro rose to $1.3055 from $1.3018 late in New York on Thursday, and hit $1.3072 during the session — the highest level since September 19 — after Draghi reassured dealers over the ECB’s bond-buying scheme. “Today all eyes are on the mother of all data publications, the US labour market report,” said Commerzbank analyst Antje Praefcke.
In September, the Fed unveiled a $40bn-per-month bond-buying scheme it said would remain in place until it sees substantial improvement in the US jobs market.
In Europe, Draghi said on Thursday that an ECB backstop to help under-pressure eurozone economies by buying their debt to keep borrowing costs low was in place and ready for use.
But he stressed it was up to governments to act and get their economies and finances in order to end the eurozone’s deep woes, and praised Spain for “remarkable” progress in passing reforms of its labour market and banks. He did not announce any new anti-crisis measures, after unveiling the bank’s latest weapon — OMTs or Outright Monetary Transactions — last month.
Draghi insisted however the new programme was already helping to ease fears of a eurozone break-up, even if it has not been put into action just yet. “Draghi was adamant yesterday that the euro was irreversible and that the OMT’s are ready as soon as a country requests aid,” said Alpari analyst Craig Erlam.
Asian equities meanwhile rose following Draghi’s latest comments. Hong Kong won 0.50 percent, Tokyo closed up 0.44 percent, Sydney rose 0.94 percent and Seoul climbed 0.12 percent. Shanghai was closed for a public holiday. Gold prices retreated to $1,784 an ounce on the London Bullion Market from $1,791.75 on Thursday.
AFP
