LONDON, Nov 4 (Reuters): Stocks extended gains on Friday after data painted a picture of a US economy that is creating jobs, but is starting to slow, tempering expectations for the Federal Reserve to keep raising rates as fast to fight inflation.
The Bureau of Labour Statistics said 261,000 workers were added to non-farm payrolls in October, above expectations for an increase of 200,000, but so did the unemployment rate, which rose to 3.7 per cent, suggesting that some of tightness in the labour market could be easing.
Wages meanwhile rose 4.7 per cent year-on-year last month, after a 5 per cent rise in September. The dollar fell against other major currencies, while stocks edged higher in volatile trade.
"There are signs that wage inflation has peaked, and as we move closer to recession that number should come down," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
"This is an indication that with recession looming things are going to get ugly going forward. In a recession, wages don't rise - they stagnate. This could be the last hurrah of hourly wages moving to the upside," he said.
The MSCI index of global shares rose 0.6 per cent on the day, breaking two straight days of losses, but still headed for a near-3 per cent weekly loss, after more big rate hikes this week from the Fed and the Bank of England.
US stock index futures were last up 0.7-0.9 per cent, compared with gains of around 0.6-0.8 per cent earlier on.
Investors' risk appetite was running fairly high on Friday, following signals from China that the government could relax some of its stringent restrictions around COVID.
China will make substantial changes to its "dynamic-zero" COVID-19 policy in coming months, a former Chinese disease control official told a conference hosted by Citi on Friday, according to a recording of the session heard by Reuters.
Chinese health authorities will hold a press conference on Saturday on COVID-19 prevention, according to a notice that said officials from the National Bureau of Disease Control and Prevention would attend. No other details were immediately available.
The offshore yuan staged its second-biggest one-day gain versus the dollar in at least a decade , while China-sensitive assets, such as mining stocks, luxury goods makers and commodities rallied sharply, despite China reporting the highest daily count of new local COVID-19 cases in six months on Friday.
"We don't think we're going to see any meaningful change in policy until at least after the two sessions meeting in March. So that's a long way away between now and then," ING regional head of research Robert Carnell said earlier on Friday.
The Fed on Wednesday set its target interest rate another 75 basis points higher to a range between 3.75 per cent and 4.00 per cent and Chair Jerome Powell said later at a press conference that it was "very premature" to think about slowing the pace of monetary tightening.
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