Global Stocks Rise as Weak Jobs Data Suggests Sustained Stimulus

07 Sep 2021 · 3rd Party Analysis

Global Stocks Rise as Weak Jobs Data Suggests Sustained Stimulus


In Summary

  • World shares rise early in the week amid renewed hopes that stimulus would persist for longer
  • European markets push higher on Monday, Asian stocks rally on Tuesday

Stocks in Asia rose broadly on Tuesday with Japanese markets in the lead. The continued uptrend in Japan was underpinned by investors piling into shares across the board in hopes that the global recovery would weather recent Delta virus challenges.

Japan’s Nikkei hit 30,000 for the first time in about six months and settled slightly below the threshold, at 29,916.14, up 0.86% on the day. China also climbed, led higher by technology stocks and indications that trade is picking up.

US futures on Tuesday hover moderately in the green. Futures contracts tied to the Dow Jones Industrial Average, the S&P500, and the Nasdaq Composite are higher between 0.1% to 0.2%.

European markets today opened little changed to slightly higher, on pace to build on their positive performance from a day earlier. Equities across the old continent on Monday had their biggest one-day gain since July as traders and investors increased their risk appetite after a disappointing US labor market growth in August.

Bitcoin Is Now Legal Tender in El Salvador

The region-wide Stoxx 600 benchmark gained 0.7% in its biggest daily rise in six weeks and settled at 475.19, just 1 point shy from its record close of 476.16 in August.

All major European indexes finished Monday’s session in the green. The German DAX was the best performer, up nearly 1%. France’s CAC40 and London’s FTSE100 closed up 0.8%, and 0.7%, respectively.

European investors are already shifting their focus to Thursday’s European Central Bank meeting. Market participants are waiting to see whether ECB officials will provide an update regarding the current asset purchase scheme that has buoyed markets across Europe since the onset of the Covid-19 pandemic.

Sideways trading in government bonds suggests investors are more aligned to expect some reversal of monetary stimulus.

Global shares kickstarted the week on a high note and neared record highs after the US jobs report for August bolstered expectations the US Federal Reserve will not rush to taper its bond-buying program at their September meeting.

After the US economy added 235,000 new jobs in August, the US central bank would most likely require more room to assess labor market conditions before reversing its ultra-loose monetary policies.

Before the weaker-than-expected US employment data, economists widely anticipated the Fed would announce a reduction of its ample monetary support after the Fed’s policy meeting on Sept. 21-22.

In other markets, cryptocurrencies remained well-bid on Monday and early Tuesday. Bitcoin pushed near $53,000 earlier today. The move coincides with the first day on which El Salvador citizens could legally pay with bitcoin for gas, groceries, land, or anything else.

On Sept. 7, El Salvador became the first country to introduce bitcoin as its legal tender, alongside the US dollar. The decision by the Latin American nation’s President Nayib Bukele, approved by the Parliament, is expected to advance the struggling economy and to cut fees for sending funds in and out of the country. Before the official adoption, El Salvador bought 400 coins.

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