Wall Street gains as US jobs report boosts optimism

Market commentary 

Wall Street closed on a positive note on Friday, with the three major indices each rising by around 0.30%. Investors reacted favourably to the release of the latest US jobs report, which showed the economy added 227 000 jobs in November, a stronger-than-expected rebound from the previous month. October’s employment figures had been weighed down by Boeing strikes and hurricanes, but the latest data revealed a significant recovery. Additionally, the figures for the previous two months were revised upwards, adding further confidence to the report. While this indicated solid growth, the unemployment rate edged up to 4.20%, in line with expectations. Wage growth remained steady at 0.40%, preventing the anticipated slowdown to 0.30%. This resilient labour market data reinforced market expectations of a gradual rate-cutting approach by the US Federal Reserve (Fed), as traders continue to assess the outlook for inflation and economic growth.

The local bourse saw modest gains, with the FTSE/JSE All Share Index (ALSI) rising by 0.11% to 86 938.44 points, while the Top 40 Index gained 0.10%. Positive performances in banks, listed property, and financials were offset by declines in precious metals, resources, and industrial metals. Over the week, the ALSI rose 2.87%, driven by strong gains in industrials, retailers, financials, and banks. The rand was slightly firmer at R17.99 to the US dollar, also strengthening against the euro and British pound, while the euro weakened against the dollar.

In the UK, the FTSE 100 ended the day down by 0.50%, closing at 8 309. The market sentiment was influenced by the positive US jobs report, which added to speculation that the Fed would maintain a more dovish stance in the coming months. UK house prices continued their upward trend, rising by 1.30% in November—the largest increase of the year. This pushed the annual growth rate to 4.80%, the highest it’s been since November 2022. In terms of individual equities, Frasers Group was the biggest loser, falling 3.60% after it faced investor scepticism over its bid to acquire Norwegian sporting goods retailer XXL.

Across Europe, the STOXX 50 climbed 0.60%, and the STOXX 600 rose by 0.40%, with both indices closing at their highest levels since mid-October. The upbeat US jobs data boosted expectations for continued interest rate cuts by the Fed, which in turn provided support for European equities. Traders seemed to dismiss the ongoing political instability in France, where President Macron faces the challenge of appointing a new Prime Minister after his government collapsed. Despite the political uncertainty, French stocks performed strongly, with notable gains in luxury and retail stocks such as Kering (+5.50%), LVMH (+3.20%), L’Oréal (+2.90%), Carrefour (+1.50%), and BNP Paribas (+1.60%).

In Asia, Japan’s Nikkei 225 Index dropped 0.77%, closing at 39 091, while the broader Topix Index lost 0.55% to end at 2 727. These declines marked a reversal from earlier in the week, with investors adjusting their positions after a period of strong gains, while sentiment in the US market lost some momentum. The mixed performance in Japan was compounded by concerns over the economic outlook, with inflation-adjusted real wages showing no growth in October compared to the previous year—an improvement from the previous months but still reflective of broader economic challenges.

Meanwhile, in China, the Shanghai Composite gained 1.05%, closing at 3 404, while the Shenzhen Component surged 1.47% to 10 791. These gains were driven by growing optimism that Chinese authorities would introduce additional economic support measures during an upcoming policy meeting. Investors are particularly focused on the Central Economic Work Conference, which will set out China’s economic priorities and targets for 2025. However, market sentiment remains cautious due to lingering concerns over China’s economic slowdown and escalating trade tensions with the US.

In the commodities markets, WTI crude oil futures extended their decline, falling below $68 per barrel on Friday. This drop came despite the decision by OPEC+ to delay restoring halted production, with investors concerned about potential oversupply in 2025. Meanwhile, gold prices stabilised around $2 625 per ounce. The precious metal found some support from the dovish outlook on US interest rates, with traders continuing to assess the implications of the Fed’s stance in the wake of the jobs report.