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Global stocks rise, spurred by surge in US employment data

Global stock prices rose to a one-and-a-half-month high on Monday after data showing a surge in United States employment while short-dated US bonds came under pressure on worries the Federal Reserve may bump up interest rates sooner than it has indicated.

US S&P 500 futures traded 0.5 percent higher, maintaining their gains made during a truncated session on Friday while Japan’s Nikkei rose 0.8 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan was almost flat, with China closed for Tomb-Sweeping day and Australia on Easter Monday break.

MSCI’s all-country world index was little changed but stood near its highest level since late February and within sight of a record high set that month.

The US Department of Labour said on Friday that non-farm payrolls – jobs outside the agriculture sector – surged by 916,000 last month, the biggest gain in new jobs since last August.

That was well above economists’ median forecast of 647,000. Data for February was also revised higher to show 468,000 jobs created instead of the previously reported 379,000.

“The data confirmed that the US economic activity is coming back as coronavirus vaccinations are well under way,” said Masahiro Ichikawa, a chief strategist at Sumitomo Mitsui DS Asset Management.

Accelerating recovery

While employment remains 8.4 million jobs below its peak in February 2020, an accelerating recovery raised hopes that all the jobs lost during the pandemic could be recouped by the end of next year.

The prospects of a return to full employment, in turn, raises the question about whether the Federal Reserve can stick to its pledge that it will keep interest rates low through to 2023.

Markets have strong doubts, with Federal Reserve funds futures fully pricing in one rate hike by the end of next year.

“Markets are surely not convinced that the Fed can be that relaxed when we have very strong jobs data while the government is proposing another massive stimulus,” Sumitomo Mitsui’s Ichikawa said.

The two-year US Treasury yield rose to 0.186 percent, near its eight-month peak of 0.194 percent touched in late February.

Yields on longer-dated bonds were more subdued, with the yield on 10-year notes slipping to 1.706 percent on Monday, giving up a part of its 4-basis-point rise made on Friday following the job report.

The strong jobs data helped to underpin the dollar.

The greenback traded at 110.72 yen, near Wednesday’s one-year peak of 110.97. The euro stood at $1.1762.

In crypto assets, ether held at $2,075.67 near Friday’s record peak of $2,144.99. bitcoin stood at $58,146 after 4.3 percent gains last week.

Oil prices dipped after the world’s largest crude exporters agreed last week to gradually ease some of their production cuts between May and July.

US crude futures fell 0.5 percent to $61.16 per barrel.

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