Stocks on both sides of the Atlantic advanced, and in Asia too, as a softer-than-expected US labour market report on Friday led traders to revive bets that the Federal Reserve would ease monetary policy as early as September. — Reuters picNEW YORK, May 7 — A gauge of global stock markets rallied yesterday on optimism that major central banks will cut interest rates this year, while the yen weakened against the dollar after a surge last week from Japan’s suspected currency intervention.
Fed Chairman Jerome Powell ”told the market that a hike was unlikely. Those were his words, ‘unlikely,’ and therefore they took that to mean that he wants to cut,” said Brad Conger, chief investment officer at Hirtle Callaghan & Co in Conshohocken, Pennsylvania.However, the inflation outlook is still uncertain as the market hopes rates are restrictive enough to slow the economy and reduce the pace of price increases, Conger said.
Philip Lane, Gediminas Simkus and Boris Vujcic said separately that the inflation and growth data cemented their belief that euro zone inflation, which was 2.4 per cent in April, will slow to the central bank’s 2 per cent target by the middle of next year. Treasury yields ticked lower as investors assessed last week’s subdued job creation, which reinforced view that the US economy was not overheating enough to derail a rate cut.
Oil prices rose after Saudi Arabia hiked June crude prices for most regions and as the prospect of a quick agreement for a Gaza ceasefire deal appeared slim, reviving fears that combat between Hamas and Israeli forces will resume soon. Hong Kong’s Hang Seng Index rose 4.7 per cent last week and on Friday clocked its longest daily winning streak since 2018, closing 0.55 per cent higher yesterday.Elsewhere, traders remained on alert for further volatility in the yen, after last week’s bouts of suspected intervention from Japanese authorities to stop a sharp slide in the currency.