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World stock markets hit new highs

World stock markets

DJIA rose 0.56%, S&P 500 added 0.37%, Nasdaq Composite gained 0.2%, STOXX 600 index advanced 0.05%, and MSCI’s gauge of stocks across the world added 0.17%

World equities markets reached new heights on Friday following a session-long jump, booking a week of solid gains after a strong U.S. jobs report.

The dollar index, which had hit a one-year peak earlier in the session, slightly retreated in late trading as risk appetite improved and stocks rallied.

The moves came after U.S. Labor Department jobs data bounced back in a reassuring sign for investors who had worried for months about how stocks would fare once the Federal Reserve began rolling back the pandemic-fuelled stimulus.

Nonfarm payrolls rose by 531,000 jobs last month as the surge in coronavirus infections over the summer subsided, offering more evidence that U.S. economic activity was regaining momentum early in the fourth quarter.

Global stocks have seen a series of records in recent weeks, bolstered by blockbuster earnings reports from the biggest U.S. listed companies.

The dollar index rose 94.634 after the jobs report, its highest level since Sept. 25, 2020. The currency’s strengthening to its highest level in more than a year offers the Fed more evidence that the economic recovery has regained momentum.

If these numbers continue at this pace, we could probably see full employment at the end of the first quarter, said Peter Cardillo, chief market economist at Spartan Securities.

Markets know that the release of strategic reserves can only have a temporary bearish effect on prompt prices and is not a lasting solution for an imbalance between supply and demand, Rystad Energy head of oil markets Bjornar Tonhaugen said in a note.

The Dow Jones Industrial Average (DJIA) increased 0.56%, while the S&P 500 added 0.37%, and the Nasdaq Composite gained 0.2%. The pan-European STOXX 600 index advanced 0.05%.

MSCI’s gauge of stocks across the world added 0.17%.

Friday’s advances came even after the Federal Reserve announced on Wednesday that it would begin tapering its massive asset purchase program, though Fed Chair Jerome Powell said he was in no rush to hike borrowing costs.

Even though it transpired as expected, it is a significant milestone. The direction of travel is now clearly towards policy normalization, though the Fed emphasized that tapering is not tightening, said Stefan Hofer, chief investment strategist for LGT in Asia Pacific. It was really expert communication and very well handled.

In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.29%, while Japan’s Nikkei shed 0.61%.

Hong Kong had weighed on the regional index, dropping 1.25% as index heavyweight and rate-sensitive HSBC dropped 3.6% after a dovish call from the Bank of England (BoE) and anxiety over property stocks.

More broadly, Shanghai shares declined 1% and Chinese blue chips shed 0.5%.

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