Friday 5 June 2020 2:58 pm

US stocks surge after employment figures smash expectations

US stocks have surged after shock employment figures that showed 2.5m Americans found jobs in May in figures that raised hopes the economy will quickly rebound from coronavirus.

European markets, already riding high on fresh stimulus and economies reopening, extended their greens as markets turned into a sea of green.

Wall Street’s Dow Jones index rocketed 2.5 per cent higher in early trading. The S&P 500 was up 2.1 per cent and the Nasdaq had climbed 1.8 per cent.

In Europe, the German Dax was up three per cent. France’s CAC 40 had jumped 3.4 per cent higher and the UK’s FTSE 100 had risen two per cent.

The US unemployment rate fell to 13.3 per cent in May, confounding analysts who were expecting a surge to almost 20 per cent. It stood at 14.7 per cent in April.

More than 2.5m Americans found jobs last month, the US Bureau of Labor Statistics said. It said the “improvements in the labour market reflected a limited resumption of economic activity”. It came as states reopened after coronavirus lockdowns.

Record-breaking jobs market

Michael Hewson, chief market analyst at CMC Markets, said: “In the space of four weeks we’ve seen history made as the US economy posted a record number of job losses in one month, only to be followed by a record number of jobs gains in the following month.”

Gregory Daco, chief US economist at Oxford Economics, said the figures had to be taken in context. Unemployment still at its highest since the 1930s.

Nonetheless, he said he saw “rapid growth” in jobs in the second half “as economic activity rebounds from very low levels”.

Investors were enthused, with travel firms leading the rally in US stocks on the Dow Jones as countries drew up plans to reopen their borders. 

American Airlines surged 28 per cent. United Airlines and cruise firm Carnival both jumped more than 15 per cent.

Oil prices rallied sharply along with US stocks, as investors bet on an increase in demand. WTI crude, the US benchmark, climbed four per cent to $38.90 per barrel. Brent crude rose 4.9 per cent to $41.90.