Dollar drops, stocks climb as weak US jobs data eases rate fears

AFP | London

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The dollar fell sharply Friday after the US economy shed thousands of jobs in July, an economic blow that lowered the risk of an interest rate hike by the Federal Reserve that could slow growth in the world's biggest economy.

Stocks gained on the report that showed 23,000 jobs were lost last month, confounding expectations that 80,000 to 100,000 new posts would be created.

Nearly every European market closed higher, with Paris, Frankfurt and Milan again reaching all-time highs, and Wall Street indices once more flirting with records for the Dow and S&P 500.

Combined with steep downward revisions to US jobs readings in May and June, the data is "likely to revive concerns among Fed officials about the health of the labour market and make them less inclined to commit to near-term tightening", said Thomas Ryan, an economist at Capital Economics.

Stocks have powered ahead in recent sessions, fuelled largely by tech names after corporate earnings beat forecasts and eased fears about when massive AI investments would start paying off.

Hopes for an imminent US-Iran deal to end the blockage of the Strait of Hormuz added to optimism that oil and gas, along with other key products, would again start flowing freely after more than five months of war.

But oil prices turned higher ahead of the weekend in the absence of any confirmation of an accord, amid reports that Iran was planning to block US and Israeli ships from the waterway.