Major stock markets and the dollar saw gains on Friday, buoyed by new US employment data indicating a resilient labour market, even amid economic uncertainty caused by President Donald Trump’s ongoing tariffs.
This positive market sentiment also saw Tesla stocks recover after their significant plunge on Thursday, which followed a high-profile public dispute between CEO Elon Musk and Trump.
Earlier in the week, concerns about the US labour market intensified after a weaker-than-expected report on private hiring.
However, the closely watched non-farm payrolls report revealed that the US economy added 139,000 jobs last month, slightly exceeding market expectations.
This figure suggests that despite the financial market volatility, supply chain disruptions, and consumer sentiment shifts triggered by Trump’s successive waves of tariffs, the US employment market remains relatively healthy.
Kathleen Brooks, research director at XTB, noted that while there were fears of the labour market buckling under pressure from tariffs and slower economic growth, the May report indicates a softening rather than a collapse.
She added that market activity suggests investors are not overly concerned about recession, anticipating continued strong corporate earnings.
Bret Kenwell, eToro US investment analyst, underscored the critical role of consumer spending, stating that the jobs market, while not “firing on all cylinders,” is “far from showing signs of a major breakdown.”
In response to the data, Wall Street mounted a strong comeback, and stock markets in Paris and London closed higher.
Frankfurt, however, closed flat, impacted by a Bundesbank warning that Germany could face two more years of recession if the trade war with the US escalates sharply.
Conversely, official data released Friday showed the eurozone economy expanded at a significantly faster pace than previously estimated in the first three months of the year, growing by 0.6 per cent.
Earlier in the week, equity markets had received a boost from hopes that talks between President Trump and Chinese counterpart Xi Jinping could lead to an easing of tensions following Trump’s “Liberation Day” global tariff increases.
However, optimism from these “very positive” talks was largely overshadowed on Thursday by the public feud between Trump and Musk, which had sent Wall Street into the red.
Trump had threatened Musk’s government contracts, causing Tesla shares to plummet approximately 15 per cent, wiping over $100 billion from the company’s value.
On Friday, Tesla shares rebounded more than five per cent in early trading.
Oil prices also rose on Friday, driven by the positive jobs data and renewed prospects for a trade détente following the Trump-Xi call, according to Mark Bowman, an analyst at ADM Investor Services.
