[1/3]FILE PHOTO – Raindrops hang from a Wall Street sign in front of the New York Stock Exchange in Manhattan in New York City, New York, U.S., October 26, 2020. REUTERS/Mike Segar/File Photo
- The global stock index MSCI closes slightly in the red
- Oil futures settle higher
- Government bonds – 2-year yields fall, 10-year yields rise
- US payroll data ease interest rate fears
NEW YORK, July 7 (Reuters) – The MSCI global equity index ended Friday’s session little changed, while the dollar weakened as government data showed US job growth slowed more-than-expected in June, raising concerns on the Federal Reserve’s interest rate hike prospects.
But while investors appeared to be hoping for a less hawkish Fed, they were also cautious about the week ahead as key US inflation stocks loomed as second-quarter earnings season began.
Official US nonfarm payrolls on Friday showed employers hired 209,000 new employees in June, below forecasts, while May figures were revised down 33,000 to 306,000. Still, the unemployment rate in June fell to 3.6% from 3.7% in May and the average hourly wage rose 0.4%, unchanged from May.
On Thursday, strong US jobs data from private payroll service provider ADP triggered a stock sell-off and pushed government bond yields higher.
While Friday’s government data initially met a more muted market reaction, shares gained some ground during the session before losing ground again in afternoon trade.
“Investors are heading into a very important week with the start of earnings season and a very important mid-week inflation reading,” said Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina.
Earlier in the session, traders seemed relieved that payrolls “came in much lower than feared, according to the ADP report,” said Sam Stovall, chief investment strategist at CFRA Research, adding that investors may have come to the conclusion come that they “overreacted” on Thursday.
“Investors are still bullish and are using short-term weakness as a buying opportunity,” Stovall added.
However, the Dow Jones Industrial Average (.DJI) fell 187.38 points, or 0.55%, to 33,734.88, the S&P 500 (.SPX) lost 12.64 points, or 0.29%, to close at 4,398.95 and the Nasdaq Composite (.IXIC) fell 18.33 points, or 0.13%, to close at 13,660.72.
MSCI’s global stock index (.MIWD00000PUS) fell 0.05% after rising as much as 0.6% earlier on Friday. Emerging market equities (.MSCIEF) lost 0.41%.
While traders were still betting on a more than 90 percent chance that the Fed would hike rates by a quarter of a point at the end of July, expectations for another rate hike in September eased slightly, according to CME Group’s FedWatch tool.
The dollar slumped after jobs data as some traders bet the Fed could cut interest rates sooner than expected. The yen also appreciated sharply against the dollar.
The dollar index fell 0.795%, the euro rose 0.73% to $1.0965.
The Japanese yen is up 1.40% against the greenback to 142.10 per dollar, while sterling was last traded at $1.2835, up 0.75% on the day.
Yields on some US Treasuries fell on Friday, although yields on longer-dated bonds were higher after jobs data allayed fears that the Fed could be more aggressive in raising interest rates.
Benchmark 10-year bonds rose 2.3 basis points to 4.064% from 4.041% late Thursday. The 30-year bond was last up 4.6 basis points from 4.003% to 4.0491%. But the 2-year bond was last down 6 basis points to return 4.9459% (up from 5.006%).
In commodities, oil prices rose to a 6-week high as supply concerns outweighed fears that further rate hikes could 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 rose 0.7% to $1,924.13 an ounce. US gold futures were up 0.89% to $1,925.60 an ounce.
Reporting from Sinéad Carew, Caroline Valetkevitch in New York, additional reporting from Nell Mackenzie and Naomi Rovnick in London, Tom Westbrook in Sydney; Edited by Andrew Heavens, David Holmes, Will Dunham and David Evans
Our standards: The Thomson Reuters Trust Principles.
Comments are closed.