European stocks pushed further in the green following the much better than expected U.S. nonfarm-payrolls data, after seesawing during the morning on the back of the week-long meltdown in Chinese stock markets.
The London large-cap index, the FTSE 100, is up around 0.5% on the day and Germany's DAX index is 0.4% higher, with the French CAC 40 broadly flat.
The euro fell against the dollar, as expectations of an interest-rate hike by the Federal Reserve increased following the positive jobs report. A weaker euro is good for European stocks because many companies in the eurozone rely on exports.
The U.S. economy created 292,000 jobs in December, much more than the 200,000 expected in a Bloomberg poll of analysts; the unemployment rate remained at 5%.
It's worth keeping in mind, however, that while the data are indeed very positive, they only paint a very broad picture of what is going on in the U.S. economy.
Alberto Gallo, head of global macro credit research at RBS, points out that top-down data like gross domestic product or unemployment figures mask wide disparities at state level.
The energy and mining sector, which had pushed GDP higher until not long ago, is now one of the main sources of imbalances in the U.S. economy and a drag on growth and employment.
In the period between 2010 and 2014, over half of U.S. states had growth of 1.75% or lower; last year, 39% of states had growth as meager as that or even poorer.
"These divergences are also present in housing markets, where some cities/states are still down 30-40% since the crisis, and in labor markets, where leverage-heavy sectors are still hurt by the post-crisis hangover," Gallo says.
In a handy map, he illustrates the states' contribution to growth and how affected they are by weakness in the mining sector:
But now, with such a strong nonfarm payrolls number for December, can it be said that the U.S. economy is out of the woods? Did the Fed's policies reach their purpose, during all those years of quantitative easing and low interest rates?
Not so fast, says Gallo. While monetary policy can provide general stimulus to the U.S. economy, it cannot fix the imbalances that have cropped up across states, industries and labor sectors.
However, on the plus side, these imbalances could weigh down on inflation, and this should be slowing the Fed on its interest rate hiking path.
Once again, all eyes are turning to the Fed. The fate of the stock markets depends on the world's most powerful central bank -- and that's not the People's Bank of China.