Stocks and dollar climb on reassuring US jobs data ~ EconomyLens.com

London (AFP) – Major stock markets and the dollar pushed higher Friday as key jobs data showed the US labour market is resilient in the face of uncertainty over President Donald Trump’s tariffs. Tesla stocks recovered after plunging Thursday due to a stunning public row between the company’s billionaire boss Elon Musk and Trump. A below-par reading on private hiring this week raised worries about the labour market and the outlook for the US economy ahead of the non-farm payrolls report, a key piece of data used by the Federal Reserve as it decides whether to move on interest rates.

The data showed hiring in the world’s largest economy came in at 139,000 last month, just above market expectations. The figure indicates that the US employment market is relatively healthy despite the jolts to financial markets, supply chains and consumer sentiment this year as Trump announced successive waves of tariffs. “There was concern that the labour market was buckling under the pressure of tariffs and weaker economic growth. However, the May report suggests that the labour market is softening, not falling off a cliff,” said Kathleen Brooks, research director at trading platform XTB, in a note.

“The price action suggests that the market is not taking these risks too seriously, that they do not see a recession in the future and that investors still think that corporate earnings growth will be strong.” The state of the jobs market is critical given how important consumer spending is to the overall economy, said eToro US investment analyst Bret Kenwell. “While it may not be firing on all cylinders, it’s far from showing signs of a major breakdown.”

Wall Street mounted a strong comeback, and Paris and London stocks closed higher. Frankfurt closed flat after sentiment was knocked by the Bundesbank warning Germany could face two more years of recession if a trade war with the United States escalates sharply. For now, however, the eurozone economy is showing signs of resilience, with official data Friday showing it expanded at a significantly faster pace than previously estimated in the first three months of the year. The EU’s data agency said the 20-country single currency area recorded growth of 0.6 percent over the January-March period from the previous quarter, up from the 0.3-percent figure published last month.

– US-China talks –

Equity markets had been buoyed this week by hopes that talks between US President Donald Trump and Chinese counterpart Xi Jinping could lead to an easing of tensions following Trump’s “Liberation Day” global tariff blitz that targeted Beijing particularly hard. However, optimism in markets from what Trump called the “very positive” talks Thursday was largely wiped out by a stunning public row between the US leader and his former adviser Musk that sent Wall Street into the red Thursday. The president threatened Musk’s multibillion-dollar government contracts and shares in his Tesla electric-vehicle manufacturer plummeted about 15 percent as the astonishing row escalated — wiping more than $100 billion from the company’s value.

On Friday, Tesla shares bounced in early trading on Wall Street, back up more than five percent. Oil prices rose on Friday, driven by the jobs data and nevertheless by prospects for a trade detente after the Trump-Xi call, said Mark Bowman, an analyst at ADM Investors Services.