Wall Street closed higher on Friday, buoyed by a better-than-expected US jobs report and a rebound in Tesla Motors shares, although concern about the Federal Reserve's rates policy remained.
The Labour Department reported on Friday that the American economy added 139,000 jobs in May, slower than previous months but beating analyst estimates, with the unemployment rate holding steady at 4.2 per cent.
It also indicated that wages grew at a solid pace, which may mean the Fed is unlikely to cut interest rates – something that US President Donald Trump has demanded from the US central bank.
Mr Trump on Thursday increased the pressure on Fed chairman Jerome Powell, urging him to cut interest rates by a full percentage point.
Mr Powell so far has resisted the calls from the White House and maintains that policy decisions will be data dependent. He met Mr Trump at the White House last week and was firm that rate decisions will be made “as required by law”.
“The labour market’s resilience puts the Fed in a difficult spot: inflation pressures remain sticky and the cooling many expected simply hasn’t materialised in the data that matters most,” said Nigel Green, chief executive of Dubai-based financial services firm deVere Group.
“This report puts another nail in the coffin for any talk of rate cuts in the summer. The Fed has said time and again it needs to see weakness in the labour market to move. This isn’t weakness. It’s strength with staying power.”
Investors also continue to monitor the tariff situation between the US and China. After imposing substantial tit-for-tat levies on imports, the world's two biggest economies agreed to a detente on their trade war on May 12.
Talks appear to be progressing: Mr Trump on Thursday spoke with Chinese President Xi Jinping, and on Friday Mr Trump said trade officials from Washington and Beijing will meet in London on Monday to resume discussions.
“Investors couldn’t care less. Dips in equity markets are still seen as opportunities to buy cheaper. And while the data is fun to watch, it remains secondary to the blind bullishness,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
“That’s the takeaway from the post – April 2 rally: the world may be wobbling, but markets march on,” she added, referring to the day Mr Trump announced his sweeping global tariffs programme.
On Wall Street, the S&P 500 and Dow Jones Industrial Average both settled 1 per cent higher, while the tech-heavy Nasdaq Composite gained 1.2 per cent.
Tesla, whose stock plummeted 14 per cent on Thursday in response chief executive Elon Musk's escalating public feud with Mr Trump, rebounded to close 3.7 per cent higher. The Texas-based company's shares rose by as much as 6 per cent.
For the week, the S&P was up 1.5 per cent, the Dow added 1.2 per cent and the Nasdaq rose 2.2 per cent. Year-to-date, the indices are up 2 per cent, 0.5 per cent and 1.1 per cent, respectively.
In Europe, markets were mostly up after the US jobs report eased fears of an economic slowdown. London's FTSE 100 closed up 0.3 per cent, boosted by banking stocks.
Paris' CAC 40 added 0.2 per cent, while Frankfurt's DAX retreated 0.1 per cent.
Earlier in Asia, major indices were mixed, with Tokyo's Nikkei 225 adding 0.5 per cent, Hong Kong's Hang Seng index declining 0.5 per cent and the Shanghai Composite closing flat.
In commodities, oil prices jumped nearly 2 per cent on Friday to post their first weekly gain in three weeks amid hopes for a US-China deal on tariffs and the jobs report.
Brent rose 1.73 per cent to settle at $66.47 a barrel, while West Texas Intermediate closed 1.91 per cent higher at $64.58 a barrel.
Gold, meanwhile, fell more than 1 per cent on investor concerns that the US jobs report won't sway the Fed to cut rates soon.
The precious metal, a hedge against inflation, declined nearly 1.3 per cent to $3,311.70 an ounce.
