The MSCI global stock index ended Friday’s session virtually unchanged, while the dollar was lower as government data showed US job growth slowed more than expected in June, alleviating concerns over prospects for rate hikes by the Federal Reserve.
But while investors seemed to be hoping for a less aggressive Fed, they were also cautiously cautious about the week ahead, with key inflation data in the US and the start of Q2 earnings season.
Official U.S. nonfarm payrolls on Friday showed employers added 209,000 new employees in June, which is lower than forecasts, while the May numbers were revised down by 33,000 to 306,000. Nevertheless, the unemployment rate fell from 3.7% in May to 3.6% in June and the average hourly wage increased by 0.4%, the same as in May.
On Thursday, strong US labor market data from private payroll provider ADP had led to a sell-off in stocks and a boost to government bond yields.
While Friday’s government data was initially met with a more muted market reaction, stocks gained some ground during the session before losing ground in afternoon trading.
“Investors are more cautiously entering a very important week with the start of earnings season and a very important mid-week inflation reading,” said Quincy Krosby, chief global strategist, LPL Financial in Charlotte, North Carolina.
Earlier in the session, traders appeared relieved that payrolls came in “much lower than feared, based on the ADP report,” said Sam Stovall, chief investment strategist at CFRA Research, adding that investors may have concluded that they were “exaggerating” Thursday. ” responded. .
“Investors still have an optimistic mindset, using short-term weakness as a buying opportunity,” added Stovall.
However, the Dow Jones Industrial Average fell 187.38 points, or 0.55%, to 33,734.88, the S&P 500 lost 12.64 points, or 0.29%, to finish at 4,398.95, and the Nasdaq Composite fell 18.33 points, or 0.13%, to close at 13,660.72.
MSCI’s measure of equities around the world lost 0.05% after rising as much as 0.6% earlier on Friday. Emerging market equities lost 0.41%.
While traders were still betting on a greater than 90% chance that the Fed would raise rates by a quarter of a percentage point at the end of July, expectations for another rate hike in September fell slightly, according to the CME Group’s FedWatch tool.
The dollar slumped following the labor market data as some traders bet that the Fed could cut rates sooner than previously expected. The yen also made a sharp jump against the dollar.
The dollar index fell by 0.795%, the euro rose by 0.73% to $1.0965.
The Japanese yen was up 1.40% against the greenback at $142.10, while Sterling last traded at $1.2835, up 0.75% on the day.
Some US Treasury yields fell Friday, although longer-term yields were higher after the jobs data allayed concerns that the Fed could become more aggressive with rate hikes.
Benchmark 10-year bonds rose 2.3 basis points to 4.064%, from 4.041% late Thursday. The 30-year bond rose 4.6 basis points to 4.0491%, from 4.003%. But the latest 2-year note fell 6 basis points to yield 4.9459%, from 5.006%.
In commodities, oil prices rose to 6-week highs as supply concerns outweighed fears that further rate hikes would slow economic growth and reduce demand for oil.
US crude rose 2.87% to $73.86 a barrel and Brent closed at $78.47, up 2.55% on the day.
Spot gold added 0.7% to $1,924.13 an ounce. US gold futures gained 0.89% to $1,925.60 an ounce.
(This story has not been edited by News18 staff and was published from a syndicated news agency feed – Reuters)