US 'No Landing' Scenario Lifts Dollar, Dow Hits Record After NFP

A stronger-than-expected US labour market has shifted focus from fears of a hard landing to a "no landing" scenario, boosting the US dollar and global markets. Japan's Nikkei index jumped 2%, fuelled by a weaker yen and concerns over potential intervention by Japanese financial authorities. Meanwhile, the euro and sterling slid amid dovish signals from the ECB and BoE, with European markets watching for further central bank comments today.

Equities

The FTSE 100 closed flat on Friday, paring earlier losses after a strong US jobs report helped ease some concerns about global growth. The index ended the week down 0.5%, while the mid-cap FTSE 250 rose 0.8% on the day but fell 1.6% over the week.

Oil and gas shares, including BP and Shell, gained 0.9%, reflecting rising crude prices driven by heightened Middle East tensions. These stocks saw their best week since April, up over 5.5% for the week.

However, AstraZeneca weighed on the index with a 1.9% decline, pulling down the pharma and biotech sector by 1.3%. Watches of Switzerland surged 5.5% on news of its acquisition of Hodinkee, lifting the personal goods sector by 3%.

In the US, the Dow Jones Industrial Average hit a record high, rising 0.8%, while the S&P 500 gained 0.9% and the Nasdaq added 1.2%. A stronger-than-expected jobs report showed a surge in US employment in September, with the unemployment rate falling to 4.1%. This reassured investors concerned about the economy slowing down. The Russell 2000, a small-cap index, outperformed, rising 1.5%.

Spirit Airlines was the standout mover in the US markets, plunging 24.6% after reports of potential bankruptcy talks. In contrast, rival Frontier Group jumped 16.4%, and United Airlines rose 6.5%. Delta Air Lines also climbed 3.8%. Energy stocks were bolstered by rising oil prices, with the S&P energy index up 1.1% for the day and 7% for the week. Electric vehicle maker Rivian saw a 3.2% drop after it lowered its production forecast for the year.

Investors are now looking ahead to the release of third-quarter earnings next week, with major financial companies like JP Morgan Chase, Wells Fargo, and BlackRock expected to report. Despite recent market concerns, the S&P 500 is up 20.6% for the year.

Forex & Commodities

The US dollar continued to hold gains, supported by a robust US jobs report and rising tensions in the Middle East. The dollar index, which measures the dollar against major peers, was flat after gaining 0.5% on Friday, marking a weekly rise of more than 2%, its largest in two years.

The yen fell to its lowest point in nearly two months, trading at around 148.40 per dollar after last week's sharp 4% drop, the biggest since 2009. This comes amid reduced expectations for a large rate cut by the Federal Reserve in November, now likely to be just 25 basis points.

Gold prices dipped 0.3% to $2,643.13 per ounce as stronger US job data reduced expectations for a significant rate cut. Spot gold prices slipped further due to firming bets on a smaller cut by the Fed, although geopolitical risks in the Middle East may still provide some support for the metal.

Oil prices fell slightly, with Brent crude down 0.36% to $77.77 per barrel, following a sharp rise of over 8% last week. Concerns over a potential widening of the Middle East conflict continue to drive price volatility.