While you were sleeping: Dollar, yen weaken after US payrolls, Wall St rallies

Monday 7th September 2009

The US dollar and yen fell and stocks rose after figures showed the US lost fewer jobs than expected last month. The jobless rate in the world’s largest economy reached a higher-than-forecast 26-year high of 9.7%.

The US economy shed 216,000 jobs in August, less than the 230,000 pace expected and down from losses of 276,000 in the previous month, according to the Labor Department. Economists say the unemployment rate may peak out above 10%.

The yen weakened to 132.92 against the euro on Friday in New York, from 132.03 on Thursday. The dollar fell to $1.4290 per euro from $1.4252. The greenback rose 0.4% to 92.99.

The Standard & Poor’s 500 headed into a long weekend by gaining 1.3% gain to 1016.40 on Friday and the Dow Jones Industrial Average rose 1% to 9441.27. The Nasdaq Composite climbed 1.8% to 2018.78. Monday is the Labor Day public holiday in the US.

General Electric climbed 3% to US$13.87, leading the Dow higher. Caterpillar rose 2.4% to US$46.11. Microsoft Corp. gained 2% to US$24.62 and Pfizer rose 1.9% to US$16.39.

The International Monetary Fund raised its forecast for global growth in 2010 to 2.9% from its 2.5% estimate in July, according to a paper to the G-20 finance chiefs meeting. The global economy will contract 1.3% this year, less than the IMF previous predicted.

In Canada, the unemployment rate climbed to 8.7% while employment rose by 27,100 last month, helping the Canadian dollar rally against the greenback.

In Europe on Friday, the Dow Jones Stoxx 600 gained 1.4% to 233.85. Among regional benchmarks, the UK’s FTSE 100 rose 1.2% to 4851.70, Germany’s DAX 30 gained 1.6% to 5384.43 and France’s CAC 40 advanced 1.3% 3598.76.

US Treasury Secretary Timothy Geithner said it’s too early for G-20 nations to exit from the stimulus measures including interest rates close to zero and some US$2 trillion of stimulus measures.

Finance chiefs from the Group of 20 meeting in London pledged to maintain measures aimed at ending the worst recession since the Great Depression.

“One of the biggest risks is saying the job is done, now we can throttle back,” U.K. Chancellor of the Exchequer Alistair Darling told Bloomberg. “We have made those mistakes before.”

“The time to start implementing an exit strategy is when you have seen the job through,” he said.

G-20 finance chiefs agreed to rein in bank bonuses and force lenders to hold more capital in reserve to prevent a repeat of the past 18 months of financial turmoil.

G-20 chiefs proposed clawing back bank bonuses and tying compensation to more long-term performance. Goldman Sachs Group reserved a record US$11.4 billion for bonuses in the first half of the year, according to Bloomberg.

Moody’s Investors Service cut the rating outlook for the global reinsurance market to ‘negative’ from ‘stable,’ saying companies were struggling to replenish funds.

“Restrained demand, overcapacity and fragile market confidence point to a higher chance that credit support will weaken,” Moody’s said in a statement.

Copper was little changed in New York on Friday, rounding out a weekly decline as stockpiles monitored by the London Metal Exchange rose 0.6% today to 308,200 tons.

Copper futures for December delivery edged up 0.15% to US$2.8665 a pound on the New York Mercantile Exchange.

Crude oil was little changed. Crude for October delivery rose 6 cents to US$68.02 a barrel on the New York Mercantile Exchange.

Gold futures for December delivery fell 0.1% to US$996.70 an ounce in New York.

Businesswire.co.nz

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