World stocks bask in US jobs data glow

London (Reuters): World stocks surged to a two-week high on Monday after strong US jobs data at the end of last week helped take the edge off investors’ concerns about the potential outbreak of trade war between the United States and other major economies.

European shares shot up across the board, following their Asian counterparts, while emerging market currencies strengthened as investors bought up so-called riskier assets and sold “safe haven” securities such as gold and government bonds.

Markets have been cheering Friday’s U.S. nonfarm payrolls data which showed a hefty 313,000 rise in jobs, but also revealed that annual growth in average hourly earnings had slowed to 2.6% after spiking in January.

This suggested that the world’s largest economy is experiencing a combination of high growth and low inflation, referred to in the market as a “Goldilocks” trend; giving investors an incentive to buy assets such as equities and high-yield bonds without having to fear tighter central bank policy.

The S&P500 surged more than 1.7% on Friday — its second-best day of the year so far — and the warm glow extended around the globe on Monday.

Germany’s DAX led gains in Europe, rising 0.9%, and MSCI’s world equity index, which tracks shares in 47 countries, hit a two-week high.

Earlier, MSCI’s index of Asia-Pacific shares outside Japan climbed 1.3%, poised for a third session of gains. South Korea rose 1%, while Australia’s main index added 0.7%, boosted by mining shares on news that Australia could be exempt from new U.S. trade tariffs on steel and aluminum imports.

Concerns over those tariffs have been weighing on European stocks, with the main pan-European stock index hitting a seven-month low at the start of the month. It has recovered somewhat from that trough to rise 0.3% on Monday.

The jobs news also lifted currencies such as the Mexican peso and Canadian and Australian dollars, while weighing on the safe-haven yen.

Those cross currents left the U.S. dollar a shade lower against a basket of currencies. Inflation data from the world’s largest economy is due on Tuesday.

Investors had trimmed holdings of yen last week on news U.S. President Donald Trump was prepared to meet with North Korean leader Kim Jong Un, a potential breakthrough in nuclear tensions in the region.

US officials on Sunday defended Trump’s decision, saying the move was not just for show and not a gift to Pyongyang.

Brent crude gave up some of Friday’s gains, dropping 27 cents to $65.22 a barrel, as rising U.S. output loomed over markets despite a slowdown in rig drilling activity.

Gold prices also slipped 0.3% $1,320.46 an ounce.