Equities rose yesterday in hopes that the Fed has come to an end of its interest rate hike cycle following markets rising in US jobs.
A recent boost of confidence as a string of reports showing a softening of the labour market and signs of the economy slowing down which indicate the US central bank’s monetary tightening is coming forward.
The expectation that China will continue announcing policies to strengthen its faltering economy and troubled real estate market added to the positive vibe.
Despite the fact that the 187,000 new jobs in August exceeded expectations, the data for the previous two months were dramatically revised downward, and pay growth slowed.
The readings pointed to a so-called “Goldilocks” scenario in which the economy was not in risk of entering a recession but was also slowing down enough to justify not raising borrowing prices any more.
“Fed chair (Jerome) Powell, or President (Joe) Biden for that matter, probably couldn’t have scripted a better August employment report if they’d tried,” claimed Ray Attrill at National Australian Bank.
“The Goldilocks metaphor is frequently misused in the economic and financial communities, but in light of the various ‘soft landing’ signals provided by the report, it does seem entirely appropriate on this occasion.”
“From the Fed’s point of view, this is exactly the type of report they would have wanted to see to justify keeping monetary policy unchanged this month,” Michael Hewson at CMC Markets continued.
We may have already seen the last rate hikes from the Fed for this economic cycle if that pattern persists, which there is no reason to believe it won’t.
Asia had a solid start to the week after Wall Street had a mostly positive day.
After being closed due to a typhoon, Hong Kong increased by more than 2% as investors caught up with Friday’s regional advance.
Shanghai, Tokyo, Sydney, Seoul, Singapore, Mumbai, Taipei, Manila and Jakarta were also in the green.
The morning’s trading in London and Paris was up, while Frankfurt was also up thanks to data showing that German exports declined less than anticipated in July.
