The Dow Jones Industrial Average rose above the 14,000 mark for the first time since 2007, leaving the index just shy of the record level of 14,164.53 set on October 9 of that year.
The S&P also jumped to within points of the record high it set on the same day just over five years ago. In London, the FTSE ended the first day of February by continuing the strong performance it had shown throughout January when it made the best start to a year since 1989.
Investors on both sides of the Atlantic snapped up shares after a report showed that the US economy created thousands more jobs over the last three months than first forecast.
Official figures showing that US companies hired 127,000 more people in November (Xetra: A0Z24E - news) and December than initially estimated was enough to overshadow a slightly weaker-than-expected jobs report for January. Economists said that the fresh evidence of strength in the labour market was also helping to allay concern about the prospects for the world’s largest economy this year in the wake of its surprise contraction last quarter.
“This shows that, underneath the surface, the fourth-quarter economy was really pretty good,” said Jack Ablin, chief investment officer at BMO Private Bank. Investors around the world have been looking to the US economy to player a bigger role this year in strengthening the broader global recovery.
On Friday, policymakers in the US said that the easing of Europe’s debt crisis and signs that Chinese economic expansion is quickening are just as important to the recent brightening in sentiment. The global economy is “gradually improving”, said William Dudley, the head of the New York branch of the Federal Reserve. “Things aren’t perfect but I think that things are definitely improving and that will be helpful for the US outlook."
A heady week for global stock markets prompted Citigroup (NYSE: C - news) to lift its year-end target for the FTSE 100 to 7,000 from 6,200. The index closed up 1.1pc to 6,347.24 yesterday. The buying spread to both Paris and Frankfurt, where the CAC 40 (Paris: ^FCHI - news) and the Dax (Xetra: ^GDAXI - news) jumped 1.1pc and 0.7pc respectively. In New York, the Dow Jones close up 1.1pc at 14,009.08, while the S&P finished 1pc firmer at 1,513.17.
“Global equities pushed higher as a plethora of positive data helped to solidify the gains made in recent weeks,” said Brenda Kelly, an analyst at IG Markets in London.
While traders snapped up shares, the pound was, however, again out of favour on the foreign-exchange markets. Against the euro, sterling slumped as low as €1.1473 and closed at its weakest since October 2011 against Europe’s single currency. Sterling has been pummelled by a combination of weaker economics reports from the UK, improving confidence in parts of Europe and the uncertainty now surrounding Britain’s future in Europe.