[1/2] An employee hiring sign with a QR code is seen in a window of a company in Arlington, Virginia, the United States, April 7, 2023. REUTERS/Elizabeth Frantz
A look ahead for the day ahead in the US and global markets by Mike Dolan
After the US debt ceiling was lifted, global markets are looking to the skies again – bolstered by the fact that resilient US labor markets continue to defy recession fears as interest rates near peak levels.
The US May jobs report later on Friday now marks the final major data point in a shortened trading week that saw June cheered on by global investors.
And measured against all other labor market soundings this week, there is little sign of any significant disruption to the still robust employment situation. Another 190,000 new jobs are expected to be added in the past month.
And while markets could see the end of the debt ceiling saga late last week, Thursday’s news that the Senate and House of Representatives passed legislation raising the ceiling and averting a default removed a major external risk.
With Federal Reserve officials ribbing rumors of skipping a rate hike this month as they assess a complicated macroeconomic picture, futures markets are again looking less than a one in three chance of a rate hike in June.
And so, after posting three straight monthly gains for the first time since 2021, the S&P500 (.SPX) and Nasdaq (.IXIC) climbed to nine-month closing highs on Thursday. Stock futures pointed to further price gains on Friday.
Wall Street’s “fear index” — the VIX (.VIX) measure of implied stock volatility — hit its lowest level since November 2021 early Friday.
Relief spread to stock markets around the world, with the MSCI multi-country stock index (.MIWD00000PUS) gaining another 0.5% on Friday and even the underperforming Hong Kong’s Hang Seng (.HSI) bouncing back and having its best day recorded for three months.
Reports that China is preparing new measures to support the property market after existing measures failed to sustain a sector recovery helped Hong Kong’s recovery.
As the dollar was hurt by pressure on the debt ceiling and thoughts of another Fed rate hike in June, it also fell back.
Elsewhere, oil markets are closely watching the weekend’s meeting of OPEC ministers – although no further production cuts are expected.
For inflation watchers, the annual decline in crude oil prices is still more than 30%.
Annual global food price declines are also more than 20%, the lowest in two years, according to the United Nations Food Agency.
In equity markets, Broadcom shares fell flat, despite the company on Thursday forecasting third-quarter revenue to beat market estimates amid massive corporate investments in AI-related technologies.
But shares of Lululemon Athletica (LULU.O) rose 13% after Thursday’s bell after the company raised sales and earnings forecasts as wealthy Americans snap up the expensive athletic apparel.
On the political front, BRICS foreign ministers reiterated their bloc’s ambitions to compete with Western powers, but their talks in South Africa were overshadowed by whether the Russian president would be arrested if he attended a summit in August.
Events to keep an eye on later on Friday:
* May US employment report
By Mike Dolan, edited by Sharon Singleton
[email protected]. Twitter: @reutersMikeD
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