Markets rise as strong US jobs growth shows rate hikes “not such a scary thing”

Markets were mostly sharply higher on Friday.

The S&P 500 soared 3.4 percent, the STOXX Europe 600 surged 2.8 percent and the Shanghai Composite jumped 2.0 percent.

The Nikkei 225 was an exception, falling 2.3 percent after the Japanese stock market opened its first trading session of 2019.

Markets in the US and Europe were boosted by a report on Friday that the US economy added 312,000 jobs in December, well above expectations.

Federal Reserve Chairman Jerome Powell said on Friday morning that the jobs report did not materially increase concerns over rising inflation.

Willie Delwiche, investment strategist with RW Baird, said that “if the Fed is positioned to continue to raise rates in 2019 because the data warrants it, it’s not such a scary thing for the stock market”.

China also provided positive news on Friday. China’s central bank announced a cut in the ratio of cash that banks must hold as reserves by 100 basis points while a report showed that the Caixin/Markit services purchasing managers' index rose to a six-month high of 53.9 in December from 53.8 in the previous month.

Stefan Hofer, a managing director and chief investment strategist at LGT Bank Asia, said that if the US and China can reach a trade deal, then Asia “will be the place to be in terms of equities”.