On Thursday, global stock markets saw a slight increase as a series of data showed a slowdown in US job growth, leading to market expectations that the Federal Reserve (Fed) will announce an interest rate cut next week to boost the world’s largest economy. At the same time, the US dollar weakened, with the dollar index (which measures the dollar against a basket of major foreign currencies) potentially experiencing its tenth consecutive day of decline.
In the US stock market, after two consecutive days of gains, there was a slight pullback during the morning trading session, with the benchmark S&P 500 index holding steady. Healthcare, non-essential consumer goods, and raw materials sectors saw the largest declines, while real estate, financial, and utilities sectors showed upward trends.
In Europe, the STOXX 600 index rose by 0.42%, with hopes of a slight increase for the week. The FTSE 100 index in London, the DAX index in Germany, and the MSCI Global Stock Index all rose.
The Japanese stock market saw a significant increase after strong demand from investors in government bond auctions, which also influenced the overall market trend. The Nikkei 225 index rose by 2.33%.
Previously, private sector employment data in the US recorded the largest drop in two and a half years, with a services survey showing stable activity in November but a slowdown in hiring.
According to data from the London Stock Exchange Group (LSEG), the US dollar index, which tracks the performance of the dollar against six major currencies, fell by 0.08% on the day, marking its tenth consecutive day of decline, the longest since 1971.
As a result of this news, the yield on the US 10-year Treasury bond rose by 3.4 basis points to 4.092%. Earlier, the Financial Times reported on Wednesday that bond investors had expressed concerns to the US Treasury Department, believing that Kevin Hassett, the candidate with the highest likelihood of replacing Jerome Powell as Fed chairman next year, would push for a significant rate cut.
“I believe the Trump administration deliberately chose this timing to announce the nomination of a new Fed chairman — regardless of whether the interpretation of being more dovish is correct — in order to create a hedge effect during this meeting to counteract the impact of previous messages,” said Michael Farr, CEO of Washington investment advisory firm Farr, Miller & Washington.
In Japan, government bonds saw the strongest demand in over six years, which helped alleviate some investors’ concerns about the country’s long-term fiscal situation, sparking similar concerns in other economies.
Shoki Omori, Chief Rates and FX Strategist at Mizuho Securities in Tokyo, stated, “The unexpectedly strong auction of 30-year Japanese government bonds created a perception of undervaluation, stimulating demand.”
He added that subsequent issuances of long-term bonds “remain fragile and need multiple prudent auctions to boost market sentiment.” Following the auction, the yield on the 30-year Japanese government bond fell by 3 basis points to 3.39%.
The US dollar against the yen fell by 0.28% to 154.8, and the yen is expected to achieve its largest weekly gain against the dollar in over two months.
According to Reuters, three government sources familiar with related discussions indicated that the Bank of Japan may raise interest rates in December, with the government expected to tolerate this decision, thereby further boosting the yen.
Meanwhile, the Chinese yuan saw a slight softening, with the US dollar against the Hong Kong offshore currency rising by 0.18% to 7.070 yuan. On Wednesday, the yuan against the US dollar reached its highest level in over a year.
Precious metals experienced a decline after recent gains. Gold prices fell by 0.28% to $4,195 per ounce; silver prices dropped by 2.4% to $57.03 per ounce, after hitting a historical high of $58.98 per ounce on Tuesday.
Brent crude oil rose by 0.06% to $62.71 per barrel.
(Report referenced Reuters)