NEW YORK, Nov 4 — Global stock indexes rose sharply, the United States (US) dollar dropped to a six-week low and benchmark 10-year US Treasury yields fell to five-week lows on Friday after data showed US job growth slowed more than expected in October.
The job growth slowdown underscored views that the US Federal Reserve may be done hiking interest rates.
Also, US two-year yields were the lowest since early September after the data, which showed US job growth slowed in part as strikes by the United Auto Workers union against Detroit’s “Big Three” carmakers depressed manufacturing payrolls.
The data also showed the increase in annual wages was the smallest in nearly two and a half years, pointing to an easing in labour market conditions.
“The good news here is that the slowdown will likely keep the Fed on the sidelines going forward.
“One of their key concerns has been an overheated economy, especially after last quarter’s GDP growth, which suggests that problem is going away,” said Brad McMillan, chief investment officer for Commonwealth Financial Network in Waltham, Massachusetts.
Wednesday’s US central bank decision to leave rates unchanged and comments by US Fed chair Jerome Powell indicated to some investors that the Fed may be done raising rates. The Bank of England on Thursday also left rates unchanged.
Central bank officials, however, stressed that more may need to be done to tackle inflation.
Traders are now pricing in only a five per cent chance of a Fed rate hike in December, down from 20 per cent on Thursday, while the odds of a January increase have slipped to 11 per cent from 28 per cent, according to the CME Group’s FedWatch Tool.
Benchmark 10-year yields fell as low as 4.484 per cent, the lowest since September 26. Two-year note yields reached 4.807 per cent, the lowest since September 1.
A decision on Wednesday by the US Treasury to issue less long-term debt than expected also fuelled the rally in bonds, as did data on Thursday suggesting the US economy might finally be cooling.
The Dow Jones Industrial Average rose 222.24 points, or 0.66 per cent, to 34,061.32, the S&P 500 gained 40.56 points, or 0.94 per cent, to 4,358.34, and the Nasdaq Composite added 184.09 points, or 1.38 per cent, to 13,478.28.
Bucking the trend of the broader market, Apple shares fell 0.5 per cent, a day after the company reported quarterly results and warned of a dull holiday quarter.
The three major US stock indexes also posted gains for the week, with the S&P 500 registering its biggest weekly percentage jump since November 2022.
The pan-European STOXX 600 index rose 0.17 per cent and MSCI’s gauge of stocks across the globe gained 1.18 per cent. The MSCI index was up 5.3 per cent for the week, also the biggest weekly percentage increase since November 2022.
The US dollar index dropped to a six-week low after the jobs data. In afternoon trading, the dollar index fell 1.111 per cent, with the euro up 1.07 per cent to US$1.0734.
The Japanese yen strengthened 0.72 per cent versus the greenback at 149.31 per dollar, while sterling was last trading at US$1.2379, up 1.46 per cent on the day.
In commodities, oil prices ended more than two per cent lower, with the geopolitical risk premium waning.
Brent crude futures settled at US$84.89 a barrel, while US crude futures settled at US$80.51.
Spot gold added 0.4per cent to US$1,994.31 an ounce.
— Reuters
