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What’s happening: US stocks closed higher on Friday following the release of the nonfarm payrolls (NFP) report for May.
What happened: Jobs data released on Friday showed wage growth moderating in May, which increased prospects of the Federal Reserve refraining from hiking interest rates at its upcoming meeting.
Market sentiment also boosted by an agreement that prevented the US government from its first ever debt default.
Why it matters: The Labor Department report showed the US economy adding 339,000 jobs in May, the most in four months. The figure was significantly higher than market expectations of 190,000. The readings for March and April were also revised higher.
The US unemployment rate rose to 3.7% in May, reaching the highest level since October last year. The figure was worse than market estimates of 3.5%. The increase in the jobless rate versus April’s 53-year low indicated an expansion in the overall workforce, rather than low vacancies.
Average hourly wages rose 0.3% to $33.44 in May, easing from 0.4% growth in the previous month. The latest report suggested that the US Fed could maintain its benchmark interest rates at the current range at its meeting later this month. This would be the first halt since the country’s central bank initiated its monetary policy tightening over a year back.
On late Thursday, the Senate passed the bill to increase the US government’s debt ceiling, avoiding what would have been the first debt default in history. The news sent the tech-heavy Nasdaq 100 to a 13-month high during Friday’s session. All major S&P 500 sectors also settled higher, with materials and the consumer discretionary sectors leading the surge on Friday.
The Dow Jones index jumped 701.19 points, or 2.12%, to settle at 33,762.76 on Friday, while the S&P 500 added 1.45% to reach 4,282.37. For the week, the Dow Jones index gained 2.02%, while S&P 500 climbed 1.82%.
What to watch: Investors await the release of economic data on services PMI and factory orders today. The S&P Global services PMI is expected to rise to 55.1 in May, from 53.6 in the prior month, while the ISM Services PMI is projected to increase to 52.4 in May, from 51.9 in April.
Analysts expect new orders for manufactured goods to grow by 0.5% in April, following a 0.9% rise in March. Markets will also watch data on consumer prices before the Fed announces its interest rate decision after its policy meeting on June 13-14.
Context: Bitcoin surged past the $28,000 mark last week but traders remained cautious after the move.
Details: Bitcoin started last week on a strong note and surged to a three-week high of $28,500 following speculations of the US debt ceiling bill being eventually approved, to protect the US government from a default. A US debt default could have severe implications for most economies around the world.
The crypto was unable to continue the upward trend and moved back to $28,000 on Tuesday and shed another $1,000 on Wednesday.
Bitcoin maintained a downward trajectory, declining to as low as $26,600 during Friday’s session. The world’s largest crypto recovered slightly over the weekend.
While Ethereum declining slightly last week, it remained close to $1,900 support level.
What are expectations: Investors will continue monitoring comments from Fed officials regarding their monetary policy, which could lend some direction to crypto prices ahead.
Other Markets: European indices closed higher on Friday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 1.56%, 1.25%, 1.87% and 1.51%, respectively.
Ukraine’s President Volodymyr Zelenskyy said that Russia was evading international sanctions on weapons by using a network of suppliers. The news sent the safe-haven US dollar index higher this morning.
Australia’s corporate profits grew by 0.5% in the first quarter. The figure missed market estimates of 2.0% and exerted pressure on the AUD/USD forex pair.
Hong Kong’s S&P Global SAR PMI declined to 50.6 in May, from 52.4 in the prior month, sending the HKD/USD pair lower in forex trading this morning.
Japan’s au Jibun Bank services PMI came in at 55.9 in May, versus the preliminary estimate of 56.3. The news exerted pressure on the JPY/USD forex pair.
Indonesia’s S&P Global manufacturing PMI fell to 50.3 in May, from April’s reading of 52.7. The latest reading still signalled expansion in the manufacturing activity for the 21st consecutive month, which sent the IDR/USD pair higher in forex trading this morning.
Germany’s new passenger car registrations, balance of trade, services PMI and composite PMI, Russia’s services PMI and composite PMI, Turkey’s consumer price index and producer inflation, South Africa’s S&P Global PMI, Spain’s consumer confidence indicator, services PMI and composite PMI, Italy’s services PMI and composite PMI, France’s new passenger car registrations, services PMI and composite PMI, Eurozone’s producer prices, services PMI and composite PMI, UK’s new passenger car registrations, services PMI and composite PMI, Mexico’s consumer confidence indicator and gross fixed investment, as well as Brazil’s services PMI, composite PMI and Central Bank of Brazil’s focus market readout.
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