Dow hits record high as interest rate fears recede

THE US stock market hit a record high yesterday, after official figures on jobs and wage growth fuelled hopes that interest rates would be kept on hold.

Virtually all the world's major financial markets closed higher on the back of the better-than-expected US non-farm payrolls data, which showed that the economy was continuing to add jobs without creating wage inflation.

The Dow Jones Industrial Average hit a new intra-day high of 9,680, and in London, the FTSE 100 closed 104.1 points higher at 6205.5. Earlier in Tokyo, stocks had put in their best one-day performance this year, helped by lower interest rates and optimism about the US jobs data, released after the Japanese market closed.

In the bond markets, US Treasuries posted their largest one-day gain in 18 months, while UK gilts also closed sharply higher.

In the currency markets, the dollar fell back from record highs against the euro, trading at $1.0824 by mid-afternoon in New York.

Neil Parker, economist at Royal Bank of Scotland, said: "It's a sigh of relief from the markets, which had been crossing their fingers and praying that the payroll numbers would not be too strong."

According to the US Labor Department, payrolls rose 275,000 in February, more than 30,000 higher than the consensus market forecast.

However, the market was cheered by the growth of average hourly earnings, which rose by just 0.1 per cent in February. This was substantially below both the January growth rate of 0.4 per cent and the consensus market forecast for February of 0.3 per cent.

Andrew Miligan at CGU Asset Management said: "It ties in with the view that disinflationary pressures and the recent turmoil have strongly encouraged companies to resist pressures to pay higher wages to attract labour."

The US economy, which is now enjoying its longest peace-time expansion on record, has added 1 million new jobs since November.

The service sector has benefited most from the surge in employment, with February seeing the largest rise in retail jobs for 11 years.

In manufacturing, however, things are less bright. Employment in the sector tumbled by 50,000 last month, contributing to the slight rise in the economy-wide unemployment rate. February's rate was 4.4 per cent, the Labor Department said, up from from 4.3 per cent in January,

According to analysts, the benign job market data makes it less likely the US Federal Reserve will raise interest rates at its next meeting on 30 March.

New figures on growth in the euro zone contrasted sharply with the buoyancy of the US economy. Eurostat said the euro zone economies grew by just 0.2 per cent in the fourth quarter of last year, compared with 0.7 per cent in the third quarter.

Consumer spending in Europe held up according to the data, but export demand was very weak, falling by 1.4 per cent over the quarter.

A surprise fall in German prices, which dropped 0.5 per cent in January, underlined the benign outlook for inflation on the Continent.

Outlook, page 21

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk