US open: Dow heads higher as dollar surges following NFP report

US stocks rose early on Friday after a report on non-farm payrolls showed the country added a lot more jobs than expected in October.

Shortly before 1500 GMT, the Dow Jones Industrial was 42 points up to 17,905.90, while the S&P 500 and the Nasdaq were broadly flat.

Non-farm payrolls soar past expectations

According to the Bureau of Labor Statistics, 271,000 jobs were added last month, the biggest monthly gain of the year, compared with analysts’ expectations for a 180,000 figure, while the unemployment rate fell to a seven-year low of 5% from 5.1% in the previous month.

"Regardless of the exact timing of the first rate hike, we still believe that the big story next year will be an unexpectedly strong pick-up in wage growth and price inflation, which will force the Fed into a much more aggressive policy tightening cycle than the Fed’s projections currently suggest," said Paul Ashworth, chief US economist at Capital Economics.

Meanwhile, the average hourly wage paid to US employees rose 0.4% last month, registering the biggest yearly increase since mid-2009.

The average American worker earned $25.20 an hour in October, a 9% month-on-month increase.

On a year-on-year basis, hourly wages rose 2.5% in October, compared with an upwardly revised 2.3% gain in September and analysts’ expectations for a 2.3% reading.

With non-farm payrolls surging past expectations, analysts believe the Fed is now firmly odds on to raise interest rates next month.

"The conclusion to take from the NFP on Friday is that the probability of a US rate hike in December has inflated considerably," said FXTM research analyst Lukman Otunuga.

"Dollar strength may resonate throughout the global currency markets and positive economic data release from the States fuel the bullish sentiments market participants already have towards the dollar."

Mixed earnings

In company news, Nvida surged 12.3% after its quarterly results beat expectations late on Thursday, while TripAdvisor plunged 9.51% after its quarterly profit fell short of estimates.

Walt Disney climbed 2.48%, despite reporting lower-than-expected revenue, while Kraft Heinz shed 3.25% after its quarterly profit missed forecasts, although the food and beverage giant lifted its dividend.

ZS Pharma jumped 40.8% after AstraZeneca revealed it had agreed to pay $2.7bn for the biotech group, while DuPont edged 1.59% higher after saying it was in separate talks with Dow Chemical and Syngenta over a potential combination of agricultural units.

Dow and Syngenta were 1.20% and 4.35% higher respectively.

Elsewhere, European stocks declined, while Asian equity markets closed mostly higher, as Chinese stocks rallied.

The dollar surged 1% against both the pound and the yen and gained 0.31% against the euro, while gold futures plunged 1.53% to $1,087.04.

Oil prices headed lower, with West Texas Intermediate sliding 1.32% to $44.61 a barrel, while Brent crude fell 0.34% to $47.82 a barrel.