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Global markets rally on US jobs data
US stocks rallied to close up 4 percent Thursday, recovering the losses suffered in the previous day of trade, while European markets also finished higher. Gold and the Swiss franc both fell.
REUTERS - Investors swooped back into world stocks on Thursday after a mildly encouraging U.S. jobs report dulled fears of recession for now, although credit markets faced strains similar to those that preceded the 2008 credit crisis.
U.S. stocks rallied more than 4 percent, picking up steam late in the day and recovering the previous day’s losses. Shares have whip-sawed throughout the week and the broad S&P 500 is down about 14 percent from its 2011 closing high set on April 29.
“It’s a bungee cord market. We’ve fallen off of a small bridge, the bungee cord bounced us up, and oscillations will diminish, but we’re still bouncing around,” said Fred Dickson, chief market strategist at D.A. Davidson & Co in Lake Oswego, Oregon.
Gold and the Swiss franc -- which have soared as investors shied away from risk—both fell. However, each had additional factors influencing their lack of appeal.
Gold faced its biggest daily loss in over a year on profit-taking and an increase in trading margins. Gold futures fell 2 percent to $1,748 an ounce.
The Swiss franc tumbled against the U.S. dollar and euro after the Swiss National Bank said it could ease monetary policy further. Markets focused on the possibility of a temporary peg between the franc and the euro to rein in a soaring currency.
The sanguine view in the equity market contrasted with nervousness in the short-term funding markets.
The London interbank offered rate, LIBOR, on three-month dollars, the benchmark rate for $350 trillion worth of financial products worldwide, reached fresh four-month highs.
The U.S. Treasury sold $16 billion worth of 30-year long bonds at a poorly received auction, with investors showing the weakest overall demand in 2-1/2 years and foreigners largely steering clear.
In the open market, the 30-year bond lost 5 points in price immediately after the auction results. The benchmark 10-year note suffered along with 30-year bonds. It last yielded 2.32 percent, up from 2.14 at Wednesday’s 10-year auction.
The MSCI world equity index gained 2.9 percent.
The Dow Jones industrial average gained 423.37 points, or 3.95 percent, at 11,143.31. The Standard & Poor’s 500 Index was up 51.88 points, or 4.63 percent, at 1,172.64. The Nasdaq Composite Index was up 111.63 points, or 4.69 percent, at 2,492.68.