Thursday 2 July 2020 4:54 pm

Nasdaq hits all-time high after data shows record jobs growth in US

Wall Street surged on Thursday, with the Nasdaq hitting an all-time high as strong US jobs data and renewed hopes of a coronavirus vaccine buoyed equities. 

The FTSE 100 also rose on optimism over a possible vaccine, ending the session 1.34 per cent up. The midcap FTSE 250 added 1.04 per cent. 

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US stocks surge following positive jobs data

All three major Wall Street indices rose after data showed the US economy added jobs at a record pace in June, the latest signal of a rebound in business activity following the easing of coronavirus-led lockdowns.

Nonfarm payrolls rose by 4.8m jobs in June, the Labor Department’s closely-watched monthly employment data showed, the most since the government began keeping records in 1939, although a recent surge in Covid-19 cases has threatened the fledgling recovery.

The Nasdaq hit a record high following the positive jobs data, gaining 1.27 per cent in early trading. The benchmark S&P 500 gained 1.14 per cent, while the Dow added 1.06 per cent.

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“The strong rebound would normally be an unambiguously positive sign that a recovery is underway [but] it is being accompanied by a sharp rise in new infections, which was what caused the collapse in the first place,” said Mike Bell, global market strategist at JP Morgan Asset Management in London.

“It is therefore too soon to say for certain that this recovery in employment sounds the all-clear for investors.”

Optimism about a post-pandemic rebound in business activity, aggressive US stimulus and hopes of a vaccine have fueled a Wall Street rally since April, with the Nasdaq notching up its sixth record closing high since early June on Wednesday.

“What we’re seeing from the payroll report is that the labor markets are healing, or at least had been healing in May and June,” said Patrick Leary, chief market strategist at Incapital.

However Leary cautioned: “these numbers don’t take into consideration a possible second wave, which is what has markets nervous right now.”

Vaccine hopes strengthen risk sentiment 

Global risk sentiment was boosted by a news of a potential coronavirus vaccine from Pfizer and Germany’s Biontech, which was found to be well tolerated in early-stage human trials.

A vaccine for Covid-19, which has killed more than half a million people globally and ground much of the world economy to a halt, has been long anticipated.

IG analyst Joshua Mahoney said that traders would be watching closely for any updates on the vaccine trials, but warned that there was still a great deal of uncertainty ahead. 

“While the results provided hope for traders that we could soon return to normality, it is worthwhile noting that the process to approval is likely to be a long one that means a 2020 production looks unlikely,” Mahoney said.

“Meanwhile, the US continues to see Covid-19 cases spike, and market sentiment is likely to remain fragile as 12 states now embark on a move to reverse reopening plans.”

Gold steadies as risk appetite returns

Gold prices steadied after nearing an eight-year peak yesterday as investors’ appetite for for higher-risk assets improved amid news of a possible vaccine. 

Spot gold was sitting at $1,768.66 per ounce by 2.30pm UK time, after hitting $1,788.96 on Wednesday.

“Investors are betting on stock markets rather than on gold. The short-term scenario is a risk-on mood,” said Activtrades chief analyst Carlo Alberto De Casa.

Primark owner drives FTSE 100 higher after “encouraging” update

Primark-owner Associated British Foods was among the FTSE 100’s highest risers after issuing an upbeat trading update. 

Shares in the group rose 4.15 per cent after it reported that trading had been “reassuring and encouraging” following the reopening of most of its stores. 

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“The recovery from the pandemic was never going to be easy for businesses, yet AB Foods’ update would suggest it stands a good chance of bouncing back,” said Russ Mould, investment director at AJ Bell.

Travel stocks also climbed following reports the government will end quarantine rules for those arriving from 75 countries so that people can go on holiday.

British Airways-owner IAG rose 5.38 per cent, while hotel groups Whitbread and Intercontinental added 5.10 and 4.14 per cent respectively. 

European and Asian equities climb

The FTSE 100’s European peers surged on Thursday as encouraging economic data from across the globe and hopes of a Covid-19 vaccine lifted sentiment.

The pan-European STOXX 600 rose 1.89 per cent to mark its fourth consecutive day of gains, with banks, carmakers and travel and leisure firms among the top risers.

In Germany, the DAX added 2.84 per cent, while France’s CAC 40 climbed 2.49 per cent. 

Asian markets were also boosted by renewed hopes of a vaccine, with equities nearing a four-month high on Thursday. 

MSCI’s broadest index of Asia Pacific shares outside of Japan rose 1.5 per cent, learning levels seen in early March.

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Hong Kong’s Hang Seng index rose over 2.23 per cent, while the Shanghai Composite gained 2.12 per cent. 

Japan’s Nikkei 225 had a more subdued session, but still ended Thursday 0.11 per cent up.