Global stocks followed Wall Street higher on Friday after strong US jobs data boosted hopes that the recovery in the world’s biggest economy is on track, despite a surge in coronavirus cases.

Japan’s Topix index rose 0.5 per cent in early trading in Asia-Pacific, while Australia’s S&P/ASX 200 was 0.8 per cent higher. Mainland China’s CSI 300 of Shanghai- and Shenzhen-listed shares added 1.2 per cent and Hong Kong’s Hang Seng index gained 0.6 per cent.

Overnight, Wall Street’s S&P 500 and the tech-focused Nasdaq index both closed 0.5 per cent higher after data showed that US employers added 4.8m jobs in June, while the overall unemployment rate fell in May.

June marked the second month in a row that jobs figures have beaten economists’ expectations, suggesting that the US economy could be bouncing back from the health crisis.

However, enthusiasm among investors has been curbed by fears of a resurgence of Covid-19 cases, which has prompted a number of states to reverse earlier measures that eased economic lockdowns.

Futures trading suggested London’s FTSE 100 would open 0.2 per cent higher later in the day. US markets are closed on Friday for a public holiday.

Optimism in China on Friday was burnished by new signs that the world’s second-biggest economy is rebounding after managing to control the spread of coronavirus.

The Caixin/Markit Purchasing Managers’ Index showed that activity in the country’s services sector rose at its quickest pace in more than 10 years as the easing of virus-related restrictions led to a resurgence in consumer demand.

The survey noted that Chinese “businesses were highly confident about the economic outlook”, but that employment continued to fall. It will take “time for the economy to fully recover”, it added.

Traders in Asia pointed to rising tensions between Beijing and Washington as source of concern for investors. The US is in the process of rescinding Hong Kong’s special trade status after Beijing imposed a controversial national security law on the international financial hub and Congress has passed a bill which would sanction officials and banks deemed to have interfered in the city’s autonomy.

Investors said that markets are unlikely to have priced in a collapse of a so-called phase one trade deal between the US and China due to souring relations.

“Financial markets are failing to recognise this very fat tail risk, and how close it may be to transpiring,” said Michael Every, global strategist at Rabobank.

Oil prices slipped with Brent, the international benchmark, down 0.5 per cent to $42.92 and US marker West Texas Intermediate 0.6 per cent lower at $40.41.

Traders put weakness in crude markets down to US states reintroducing lockdown measures, saying this could hurt demand ahead of the important July 4 holiday.

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