Global stock markets have risen following Wall Street’s upward trend on Friday, as investors anticipate a US job market report that could ease fears about an increase in interest rates. Traders hope that the expected cooling of the US job market will discourage the Federal Reserve from carrying out additional interest rate hikes. The Shanghai Composite Index and Nikkei 225 in Tokyo both rose by 0.4% and 0.2%, respectively. Meanwhile, the Kospi in Seoul rose by 1.2%, and Hong Kong and Australian markets remained closed for a holiday.
Expected Cooling of US Job Market
Traders who fear that high-interest rates may cause a global economic downturn are eagerly waiting for the US government data. The report will indicate if the job market is slowing down, prompting the Federal Reserve to abandon aggressive rate hikes to contain inflation. Edward Moya of Oanda reported that other data has confirmed the beginning of a labor market slowdown. Economists expect Friday’s non-farm payrolls report to show that the number of jobs added by US employers fell to 240,000 last month from February’s 311,000.
Regulators Calming Fears of Financial System Instability
Markets were shaken by the failure of two US banks and one in Switzerland last month, but regulators have calmed fears by promising to provide more lending to institutions if necessary and other measures to stabilize the global financial system. However, there is still fear in the bond market, with Treasury yields falling due to concerns about a weaker economy and the struggles of the banking system. The 10-year Treasury yield fell to 3.29% from 3.31% late Wednesday and from over 4% last month, while the two-year yield dropped to 3.82% from over 5% in February.
Expectations of a Brief Recession
Despite the fact that the US economy has slowed under the weight of higher interest rates, inflation remains above the Fed’s 2% target, fueling expectations of at least a brief recession this year. Fed officials plan at least one more interest rate increase and will then maintain elevated rates until at least the beginning of 2024. However, some traders expect the US central bank to begin cutting rates as early as mid-year to support economic growth.
Market Highlights and Analysis
On Wall Street, the benchmark S&P 500 rose by 0.4% to 4,105.02 on Thursday, with the Nasdaq composite rising by 0.8% to 12,087.96. Despite reporting stronger profit and revenue than expected for the latest quarter, Levi Strauss fell by 16%, and Costco fell by 2.2% after the warehouse membership retailer announced that an important measure of its sales declined in March due to consumers reducing spending on big-ticket items. The dollar edged down to 131.72 yen from 131.77 yen on Thursday, while the euro declined to $1.0919 from $1.0930.