Global stocks also rose slightly on Friday, but Irish shares underperformed the wider market.
The two main factors driving the rapid change in sentiment were after U.S. jobs data rose significantly, showing domestic job creation was nearly twice as high as estimated, and after tech giants’ This was in response to the rise in stock prices across the industry due to the financial results of Meta and Amazon.
So-called nonfarm payrolls rose by 353,000 in January, according to the federal Bureau of Labor Statistics. This compares to the 180,000 level predicted by economists compiled by Reuters.
The numbers effectively eliminate the possibility that the U.S. central bank, the Federal Reserve, will cut interest rates as early as May. The rate cut had been widely priced in by investors, who had previously been unconvinced by policymakers’ efforts to soften their views.
Meanwhile, shares in Meta Platforms, the owner of Facebook and Instagram, rose about 21% after the company reported better-than-expected profits for its latest quarter and said it would start paying dividends to investors.
On a cash basis, the stock price increase added about $200 billion to Meta’s stock market valuation in just one day, a record for any company.
The news underscores Meta’s status as a “comeback king,” following a previous Metaverse foray that failed to convince investors and a strategic shift to layoffs and cost reductions.
Amazon shares rose 7.3% after the company reported better-than-expected profits and revenue for its latest quarter.
Markets where bond and stock returns rise at the same time are relatively rare.
“The (stock) market is on happy medicine,” said Noel O’Halloran, chief investment officer at KBI Global Investors. “Investors believe there will be a miraculous soft landing with lower interest rates, lower inflation, and no damage to earnings, and market sectors such as technology are built on the belief that stock prices can miraculously skyrocket. The price is set.”
European markets did not see such dramatic changes. In Dublin, the main Iseq index closed overall lower, although individual performance was mixed. Unifar, Kingspan and Ryanair each ended the day with strong results. Share prices of Kerry Group, Permanent TSB, and Glanvia all fell.