On Wall Street, stocks surged and the dollar strengthened on Friday, influenced by a notable U.S. jobs report, indicating the Federal Reserve might postpone interest rate cuts pending additional inflation data.
The report also led to a decrease in bond prices. Gold prices reached new heights, and the Mexican peso saw its most significant appreciation since the end of 2015, boosted by robust U.S. consumer demand.
The U.S. job market outperformed expectations in March, with substantial employment growth and consistent wage increases, according to the Labor Department.
This development has led investors to reconsider the potential for Federal Reserve rate cuts in 2024. “It might be two, it’s too early to tell,” commented Anthony Saglimbene, Ameriprise Financial’s chief market strategist.
He highlighted that the current economic momentum might dissuade the Fed from reducing rates within the year.
Speculation about imminent rate reductions diminished, following recent data on the slowing U.S. services sector and Federal Reserve Chair Jerome Powell’s remarks, suggesting a cautious approach towards rate cuts in 2024.
However, Minneapolis Fed President Neel Kashkari’s statement hinted that rate cuts might not be necessary this year.
Dec Mullarkey of SLC Management noted the stabilization of wage increases, suggesting a shift towards more normalized wage growth.
“Right now, this gives the Fed more reason to stay patient,” he said, implying a possible reduction in rate cuts from three to two.
“Small business surveys indicate a decrease in worker demand and wages slightly above the Fed’s inflation target, offering a positive sign for the Federal Reserve’s strategy to manage inflation without hampering job growth.
Investor attention is now on the upcoming consumer price index (CPI) report, expected to show a slight decrease in core inflation, which could influence the Fed’s short-term policy decisions.
In the global stock market, MSCI’s global stock performance index saw a modest increase, despite losses in Europe.
Wall Street, however, experienced a rally with notable gains across major indexes.
The 10-year Treasury note yields rose, reflecting a drop in bond prices, and the dollar index saw a slight uptick.
Gold reached record prices, and oil prices climbed, driven by geopolitical tensions and supply concerns, marking a second consecutive week of gains.
In Asia, market performance was mixed, with the Chinese holiday contributing to lower trading volumes and the Nikkei index declining due to a stronger yen and anticipations of further rate hikes in Japan.
The Hang Seng Index in Hong Kong remained relatively stable.