Positive US Employment Data Boosts Stock Markets and Dollar
The major stock markets and the dollar experienced gains on Friday, driven by new US employment data that indicates a resilient labor market despite economic uncertainties caused by President Donald Trump’s ongoing tariffs.
The positive market sentiment also led to a recovery in Tesla stocks after a significant plunge on Thursday, following a high-profile public dispute between CEO Elon Musk and President Trump.
Earlier in the week, concerns about the US labor market intensified after a weaker-than-expected report on private hiring. However, the non-farm payrolls report showed that the US economy added 139,000 jobs last month, slightly surpassing market expectations.
This data suggests that despite the financial market volatility, supply chain disruptions, and consumer sentiment shifts triggered by Trump’s tariffs, the US employment market remains relatively healthy.
Kathleen Brooks, research director at XTB, mentioned that while there were fears of the labor market collapsing under pressure from tariffs and slower economic growth, the May report indicates a softening rather than a collapse.
She also noted that market activity indicates investors are not excessively worried about a recession and are expecting strong corporate earnings to continue.
Bret Kenwell, eToro US investment analyst, emphasized the importance of consumer spending, stating that while the jobs market may not be at its peak, it is far from showing signs of a major breakdown.
In response to the positive data, Wall Street made a strong comeback, with stock markets in Paris and London closing higher. However, Frankfurt closed flat due to a Bundesbank warning that Germany could face two more years of recession if the trade war with the US escalates sharply.
On the other hand, official data released on Friday showed that the eurozone economy expanded at a faster pace than previously estimated in the first quarter, growing by 0.6 per cent.
Earlier in the week, hopes of easing tensions between President Trump and Chinese counterpart Xi Jinping had boosted equity markets following Trump’s tariff increases. However, optimism from these talks was overshadowed by the public feud between Trump and Musk on Thursday, causing Wall Street to dip.
Trump’s threat to Musk’s government contracts led to a 15% drop in Tesla shares, wiping over $100 billion from the company’s value. However, on Friday, Tesla shares rebounded more than five per cent in early trading.
Oil prices also rose on Friday, driven by the positive jobs data and renewed prospects for a trade détente following the Trump-Xi call, according to Mark Bowman, an analyst at ADM Investor Services.
