Dow hits record high as interest rate fears recede
Saturday 06 March 1999
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
- 1 President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
- 2 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
- 3 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
- 4 AirAsia flight QZ8501 missing: Search for plane carrying 162 passengers from Indonesia to Singapore suspended overnight
- 5 Naomi Wolf reacts to Isis 'conspiracy theories' critism after she questions whether beheading videos are real
President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
UK weather: Warning for more snow and ice as freezing temperatures and gales hit Britain
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Millions of Britons struggling to feed themselves and facing malnourishment
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Nigel Farage: Ukip leader named 'Briton of the year' by The Times
Immigrants make UK racist, says Ukip councillor Trevor Shonk
iJobs Money & Business
Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...
Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...