U.S. stocks set new records after “Goldilocks” employment data

After the US employment data in June was better than expected, the Wall Street stock market hit a record high on Friday, indicating that the world’s largest economy is getting rid of the pandemic at a strong pace.

U.S. labor market Add to The number of new jobs added last month was 850,000, exceeding economists’ expectations of 720,000 new jobs and much higher than the revised figure of 583,000 in May.

Wall Street’s broad S&P 500 index and the technology-based Nasdaq Composite Index built on records set earlier this week. Both benchmark indexes rose 0.6% in afternoon trading in New York.

However, the employment data is not too strong to indicate that the Fed will tend to control the stimulus measures during the pandemic that supported asset prices throughout the health crisis.

Danni Hewson, financial analyst at AJ Bell, said: “U.S. employment data has brought better news to Wall Street,” he said. This is the “Goldilocks” moment of the market—“not too hot nor too cold” .

“There are enough new jobs to confirm that the economy is developing, [but] Enough unemployed give a warm embrace to the Fed’s current strategy,” Hewson added. Fed Chairman Jay Powell vowed to continue to support the bank’s monetary policy until the labor market recovers from the pandemic.

The rise in the stock market was accompanied by a small rebound in government bonds. The yield on the benchmark 10-year U.S. Treasury note fell 0.04 percentage points to 1.44%. The yield on the equivalent German foreign debt also fell to minus 0.24%.

The Stoxx Europe 600 Index and Frankfurt’s Xetra both closed up 0.3% across the region, while London’s FTSE 100 Index was flat.

“We think that the European market does benefit from the depreciation of the euro,” said Bastien Drut, chief theme macro strategist at CPR Asset Management, referring to the month-long rebound of the dollar against other currencies. The euro stabilized at US$1.1841 against the US dollar last Friday and has fallen by more than 3% since the beginning of June.

Drut said that another positive factor for European stock markets is the composition of European stock markets, which favor cyclical stocks that benefit more from the reopening of the region.

Although some policymakers in the U.S. Central Bank began to talk more openly about the need to prepare for the gradual end of stimulus measures during the pandemic, in the Eurozone, the European Central Bank has maintained a more moderate stance, reflecting the different steps that countries are taking on both sides of the Atlantic. Recovery.

“The European Central Bank is always very dovish, and you can see that the Fed is under great pressure to normalize policy and reduce asset purchases,” CPR’s Drut said. “This path will continue to diverge in the next few quarters.”

After officials at the OPEC + major oil-producing countries meeting worked hard to reach an agreement on output, oil prices hovered near their highest level in two and a half years. The global oil benchmark Brent crude oil and US West Texas Intermediate crude oil stabilized at around US$75 per barrel.

Leave a Reply

Your email address will not be published. Required fields are marked *