Wall Street stocks surged Friday, with the Nasdaq ending at a record following a strong US jobs report and the announcement of a summit between the US and North Korea.
However, uncertainty surrounding US President Trump’s tariffs plans and fears of a trade war kept a lid on gains in other markets, dealers said.
The agreement by Trump and North Korean leader Kim to hold talks “boosted risk sentiment … encouraging investors to buy into riskier assets such as shares”, noted Fiona Cincotta, senior market analyst at traders City Index.
The tech-rich Nasdaq Composite Index jumped 1.8% to 7,560.81, besting the prior record in late January by 55 points.
The gains were similar for both the Dow and S&P 500, with analysts pointing to Labor Department data that showed employers added 313,000 jobs in February, far above analyst expectations.
The closely-watched monthly US payrolls report also revealed moderating wage growth compared with the January report, mitigating concerns the Federal Reserve will speed its pace of interest rate hikes.
The report was “a perfect combination for Wall Street,” said Jack Ablin, chief investment officer of Cresset Wealth Advisors.
“It gives the Fed some room to not have to be too aggressive,” Ablin said. “That’s good for risk takers. Money will stay cheap.”
Meanwhile, US officials vowed there would be no let-up on pressure on North Korea ahead of the summit on the nuclear program.
South Korea, where the main stocks index closed up 1.1% Friday, said the two leaders would hold an unprecedented summit by the end of May, raising hopes they can broker an agreement on Pyongyang’s nuclear program that has fueled tensions on the peninsula.
Hopes that the two could reach some sort of agreement also led to a plunge in the yen, which is considered a go-to safe currency in times of volatility and uncertainty. The dollar jumped to its highest level in a week against the Japanese unit.
Lingering trade worries
Analysts said investors were somewhat placated by Trump’s modified approach to tariffs, which exempted Mexico and Canada making them less severe than initially feared.
However, some observers warned the issue could still blow up down the road and dealers remain on edge on concerns over a possible trade war, which sparked a global sell-off last week.
The tariffs decision, coupled with the departure of market-friendly White House aide Gary Cohn, raises worries “that the nationalist and protectionist views within the White House will have a stronger influence on policy going forward,” said Oxford Economics in a note.
“The steel and aluminium tariffs are symptomatic of this underlying drift. Further, the risks of increased trade tensions with major partners like the European Union, China, Canada and Mexico is real.”
European bourses were mixed, with London rising 0.3% and Paris winning 0.4% and Frankfurt dipping 0.1%.