Global stocks continued to rise on Friday following the release of data showing that the US economy added fewer jobs than expected in October. The weaker job growth has increased investor hopes that the Federal Reserve will halt its interest rate hikes. The dollar also fell against major currencies after the release of the data, with the US nonfarm payrolls rising by 150,000 in October, lower than the predicted 180,000.
Equities are on track for their largest weekly increase in a year after the Federal Reserve left interest rates unchanged for a second consecutive meeting on Wednesday. The Bank of England also kept rates steady on Thursday, leading to a drop in bond yields. MSCI’s index of world stocks rose by 0.45% after the data, and is set to finish the week 4.5% higher, marking the largest weekly rise since November 2022.
The dollar index, which measures the currency against its major counterparts, fell by 0.74% to 105.45. Futures for the S&P 500 stock index also rose, up 0.37%, following a 1.9% jump the previous day.
Richard Flynn, Managing Director at Charles Schwab UK, stated that investors will interpret the weak jobs report as a sign of slowing demand in the labor market. This could discourage further interest rate hikes and be viewed as a positive development by investors.
Europe’s benchmark Stoxx 600 equity index increased by 0.25% on Friday, and is on track for a weekly increase of 3.5%.
The 10-year US Treasury yield fell by 10 basis points to 4.572% following the release of the data. It had previously fallen by 3 basis points to 4.639%. The yield, which is used as a reference for borrowing rates worldwide, declined by 20 basis points over the course of Wednesday and Thursday after the Federal Reserve and Bank of England meetings.
While central bank officials have highlighted the need to address inflation, many investors believe that the next move in borrowing costs will likely be downward.
Samuel Zief, Head of Global FX Strategy at JPMorgan Private Bank, stated that if the market can be convinced that all central banks are holding steady, it could encourage bond yields to decrease.
The recent decision by the US Treasury to issue less long-term debt than anticipated, as well as data suggesting a potential cooling of the US economy, have also contributed to the rally in bonds.
Oil prices saw a decline for the week, in part due to the absence of a wider conflict between Israel and Hamas, as was feared. Brent crude oil futures fell by 3.4% since Monday, reaching $87.33 a barrel, but increased by 0.5% on Friday.
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