U.S. stock futures hold steady after December jobs report

 

U.S. stocks were set to extend their new year rally Friday, a day after the Dow Jones Industrial Average closed above 25000 for the first time and as several indexes around the world notched multiyear highs.

Stocks have continued last year’s gains, pushed higher by investor optimism over the global economy and a belief that central banks won’t hurt market and growth prospects by withdrawing stimulus too quickly.

On Friday, data showed the pace of U.S. hiring slowed in December even as the unemployment rate held at a 17-year low. Wage growth, which many investors look to as a sign of inflation, remained relatively subdued, with hourly wages improving modestly last month and rising 2.5% from a year earlier.

Those data follow employment numbers released Thursday by payroll company Automatic Data Processing , which revealed that the U.S. private sector added 250,000 jobs in December, more than economists had anticipated.

Both Dow and S&P 500 futures pointed to rises of 0.4% when U.S. markets open, up slightly from before the report.

“The market sees that central banks will be taking tightening policy slowly this year, that growth prospects are pretty strong, and that bottom-up earnings expectations from analysts are continuing to move higher,” said Michael Sneyd, global head of FX strategy and cross-asset strategist at BNP Paribas. “That’s a green light for equities investors.”

A trader wears a “Dow 25,000” hat while working on the floor of the New York Stock Exchange on Thursday.
A trader wears a “Dow 25,000” hat while working on the floor of the New York Stock Exchange on Thursday. PHOTO: MICHAEL NAGLE/BLOOMBERG NEWS

The Stoxx Europe 600 rose 0.6% in afternoon trading, with the health-care sector among the strongest performers, up 1.1%. Germany’s DAX was up 1.1%, outperforming the other major European indexes.

“If you have global trade prospects that look good and investment picking up, then German equities are quite a good way to play that,” said William Hobbs, head of investment strategy at Barclays Wealth.

Friday’s gains in Europe came after almost all Asia-Pacific benchmarks hung on to gains in afternoon trade.

Japan’s Nikkei index closed up 0.9% at another 26-year high. Taiwan’s tech-heavy Taiex gained 0.3%, hitting a 28-year high. Australia’s S&P/ASX 200 rose 0.7% to a 10-year high, as bank shares and the strong price of oil outweighed the unexpected news of a November trade deficit.

The dollar reversed some of its recent falls against both the euro and the Japanese yen. The euro fell 0.2% and the yen dropped 0.4%. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was up 0.2% but still down 1.7% on the month.

U.S.-traded crude oil slipped 0.8% to $61.52 a barrel after closing at a fresh three-year high on Thursday.

Investors should rotate back into energy equities as 2018 progresses, according to Jonathan Garner, managing director and chief Asian and emerging-markets equity strategist at Morgan Stanley . “The main sectorial theme for the year is the outperformance of energy,” he said.

Among other Asian indexes, South Korea’s Kospi gained 1.3% after falling Thursday. China’s Shanghai Composite was up 0.2% and its Shenzhen Composite inched 0.04% higher. Hong Kong’s Hang Seng Index, however, was down 0.1% after hitting a 10-year high Thursday.

Write to David Hodari at David.Hodari@dowjones.com

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