Expectation in global markets: the reasons why investors are betting on stocks

Expectation in global markets: the reasons why investors are betting on stocks

The world stocks rose on Friday to one-month highs, while the dollar was steady, giving a boost to commodities, after softer U.S. jobs data gave investors confidence that interest rates will begin to fall this year.

In currencies, the pound was heading for a modest weekly loss after the Bank of England on Thursday paved the way for the start of rate cuts as soon as next month, while data showed the British economy emerged from a slight recession in the first quarter of this year.

The MSCI global index rose 0.3%, as Asian and European equities benefited from the rise on Wall Street the day before, after it was reported that the number of people seeking unemployment benefits increased for the first time. more than expected, suggesting that the US economy is beginning to slow.

Instead of slowing down the stock market, The numbers are giving investors confidence in the Federal Reserve’s ability to cut interest rates this year.at a time when Europe’s central banks have begun to lower borrowing costs.

The STOXX 600 advanced 0.8% toward all-time highs on Friday, heading for one of its best weekly results of the year. US stock futures rose 0.3-0.4%.

“What could have been a crack in the overall market uptrend has turned into an opportunity to get long again, and that’s what we’re seeing now in May,” said David Morrison, market strategist at Trade Nation.

Thursday’s weekly unemployment data followed last week’s report that showed U.S. job growth slowed more than expected in April and annual wage growth fell below 4% for the first time in almost three years.

Markets will closely monitor the US producer price index and consumer price index for April, due to be released next week, for signs that inflation has resumed its downward trend towards the 2% target rate set by the Fed.

Last month’s higher-than-expected inflation data dashed any expectations of a rate cut in the near term. Markets are currently not expecting a decline until November, although there is still a chance that the Federal Reserve will act in September.

On the contrary, the probability that the Bank of England will cut rates in June is 50% and that it will do so in August is almost total. There is also an 88% chance that the European Central Bank will ease its monetary policy in June.

Sterling was steady at $1.2524, having hit a more than two-week low of $1.2446 on Thursday.

The dollar index, which measures the US currency against six other currencies, rose 0.1% to 105.28, while the euro was trading stable at $1.0779, marking its fourth consecutive week of gains against the dollar.

The yen was trading at 155.74 per dollar, and Japanese Finance Minister Shunichi Suzuki repeated recent warnings from Tokyo that it was willing to take action against disorderly movements in the currency.

With the dollar taking a breather, raw materials rose. Brent crude futures gained 0.6% to $84.35 a barrel, while copper futures rose 1.6% to $10.066 a ton, and gold rose 1.1% to $2,371 a barrel. ounce.

Source: Ambito

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