Last week in the markets...

Updated Tuesday, October 9, 2012 :: Views (11914)

Stock markets advanced last week, buoyed by encouraging signs of improvement in the U.S. economy. Wall Street’s major indexes hit new five-year highs, while markets in Canada and around the world reacted positively to U.S. developments.

U.S. employment data pointed to improved job creation as the unemployment rate unexpectedly dropped to 7.8%, its lowest since January 2009. This boosted hopes that a sustainable recovery is taking hold in the jobs market. In Canada far more jobs than expected were added in September for the biggest employment jump in five months.

A survey of U.S. purchasing managers showed the manufacturing sector expanded in September as new orders and employment picked up. The Institute for Supply Management’s U.S. manufacturing index rose for the first time since May. This contrasted with a government report showing U.S. factory orders suffered the worst decline for more than three years in August. Meanwhile another report showed solid gains in retail sales in September.

Markets were also encouraged by last week’s release of the minutes of the U.S. Federal Reserve September policy meeting, suggesting that the Fed continues to look for further ways to boost the economy.

Global surveys of manufacturing activity were less encouraging. While Chinese manufacturing activity stabilized in September, it remains weak. In Europe manufacturing activity continued to slow.

Concerns over eurozone issues continued. Uncertainty persisted over whether Spain would request a bailout and Portugal instituted sweeping tax hikes to meet budget goals.

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