Strong jobs data eased fears for the world's top economy / © GETTY IMAGES NORTH AMERICA/AFP
Stock markets rallied on Friday after senators voted to lift the US debt ceiling and as strong jobs data eased fears for the world's top economy.
Wall Street was up and Asian and European stocks closed in the green as investors welcomed the jobs report and news that the United States would not run out of money to pay its bills.
The dollar was also strengthening against rival currencies after Democratic President Joe Biden and the Republicans ended months of wrangling and the threat of a potentially catastrophic default.
"The Senate swiftly approved the new debt ceiling deal in the US prompting relief in the markets," said AJ Bell investment director Russ Mould.
"A bigger bounce might have been forthcoming had investors not already been very much factoring in an agreement, with only a modest sell-off around the crisis."
Official data released on Friday showed that the United States added 339,000 jobs in May even as the unemployment rate climbed to 3.7 percent and wage gains fell, signalling a persistently strong labour market.
Analysts had expected the Fed to relent on more than a year of interest rate hikes aimed at curbing historically high inflation if the jobs market numbers cooled.
"As labour market conditions come into slightly better balance, the upward pressure on wage growth is easing... the Fed can still afford to skip a rate hike in June," noted Paul Ashworth of Capital Economics.
The hiring figures will ease concerns about the economy "suffering a hard landing", while the unemployment numbers will assuage some Fed worries about wage inflation and the tightness of the jobs market, said Briefing.com analyst Patrick O'Hare.
"It was a report that was the best of both worlds."
- Fed pressure -
But the hiring data, which exceeded expectations and represented an increase on April's figures, may push the Fed to hike rates again later this month.
Monetary policy officials have said a softer labour market and much lower inflation were key to the central bank being able to stop lifting borrowing costs.
"The higher-than-expected reading for non-farm payrolls in May... will add pressure on the Federal Reserve to continue its path of increasing rates," said Srijan Katyal at the international brokerage ADSS.
"It's likely that the Federal Reserve will raise interest rates by at least 25 basis points when it next meets."
Fed officials have indicated they were likely to maintain rates at their next meeting but were "unlikely" to reduce them soon, added Mike Fratantoni, chief economist of the Mortgage Bankers Association.
"This somewhat mixed jobs report is likely to support that approach," he added.
Oil prices meanwhile jumped as traders eyed a weekend output meeting of the OPEC+ grouping of crude producers.
London stocks were also lifted after pet care firm Dechra Pharmaceuticals agreed to a £4.5-billion ($5.6-billion) takeover by Swedish private equity firm EQT and the Abu Dhabi Investment Authority.
- Key figures around 1530 GMT -
New York - Dow: UP 1.9 percent at 33,672.93 points
London - FTSE 100: UP 1.6 percent at 7,607.28 (close)
Paris - CAC 40: UP 1.9 percent at 7,270.69 (close)
Frankfurt - DAX: UP 1.3 percent at 16,051.23 (close)
EURO STOXX 50: UP 1.6 percent at 4,323.52 (close)
Tokyo - Nikkei 225: UP 1.2 percent at 31,524.22 (close)
Hong Kong - Hang Seng Index: UP 4.0 percent at 18,949.94 (close)
Shanghai - Composite: UP 0.8 percent at 3,230.07 (close)
Euro/dollar: DOWN at $1.0730 from $1.0762 on Thursday
Dollar/yen: UP at 139.71 yen from 138.80 yen
Pound/dollar: DOWN at $1.2478 from $1.2526
Euro/pound: UP at 85.99 pence from 85.91 pence
Brent North Sea crude: UP 2.3 percent at $75.95 per barrel
West Texas Intermediate: UP 2.3 percent at $71.68 per barrel