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What’s happening: US stocks closed sharply higher on Friday, as investors digested the latest nonfarm payrolls (NFP) report.
What happened: A rally in technology stocks provided a boost to the overall stock market on Friday.
The S&P 500 ended a four-week losing streak and recorded its biggest daily percentage rise since August.
Why it matters: Data released on Friday showed that hiring in the US has increased more-than-expected in September, while wage growth has slowed.
Wall Street stocks moved lower immediately after the data release but rebounded sharply as the session progressed. Nonfarm payrolls surged by 336,000 in September, significantly topping market expectations of 170,000. This followed a 227,000 increase in August and was the strongest job growth in eight months.
Data also showed a moderation in wage growth for September. Average hourly earnings for all employees on private nonfarm payrolls increased by 7 cents, or 0.2%, to $33.88, at the same pace as in the earlier month. Over the past 12 months, average hourly earnings surged by 4.2%, recording the least growth since June 2021 and below market expectations of a 4.3% increase.
The unemployment rate came in steady at 3.8% in September, but was above market views of 3.7%.
Markets were eagerly awaiting the NFP report to get some insights into the Federal Reserve’s next move on interest rates, following a recent increase in US Treasury yields. Benchmark 10-year Treasury yields climbed to a 16-year high on Friday.
The Dow Jones index surged 288.01 points, or 0.87%, to close at 33,407.58, while the Nasdaq 100 jumped 1.70% to finish at 14,973.24 on Friday. The S&P 500 climbed 1.18% to settle at 4,308.5 on Friday. Information technology and communication services were among the top performing sectors on the S&P 500.
For the week, the S&P 500 gained 0.5%, while the Dow declined 0.3%. The recent gains came after US stocks recorded sharp losses for September and the third quarter.
What to watch: Investors will watch economic data on consumer price inflation and producer price index, scheduled for release this week. Markets also await the start of the earnings season, with major banks, including JPMorgan Chase and Wells Fargo, set to release this week.
Context: The CAD/USD forex pair rose sharply on Friday after Canada released a better-than-expected jobs report.
Details: The Canadian economy added 63,800 jobs in September, notching the highest gain in eight months. The figure was also well above market estimates of 20,000.
The unemployment rate remained unchanged for the third straight month, at 5.5%, in September. This is the highest rate since January 2022 but below market expectations of 5.6% and lower than the pre-pandemic averages.
The release of an upbeat jobs report fuelled speculations of further rate increases by the Bank of Canada.
Increase in the prices of oil, one of Canada’s major exports, also lent support to the loonie. Crude oil prices settled higher by 0.6% to $82.79 per barrel on Friday.
Weakness in the US dollar also provided a boost to the CAD/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.2% on Friday.
The CAD/USD forex pair gained around 0.3% to reach 1.3665 on Friday, after hitting a six-month low in the previous session. For the week, the loonie shed around 0.6% amid a rally in bond yields.
The S&P/TSX Composite index gained 0.57% to close at 19,246.07 on Friday, tracking the rally on Wall Street.
What to watch: With no major economic releases scheduled for today, investors await economic data on building permits later this week. The total value of building permits in Canada, which declined by 1.5% to $11.7 billion in July, is expected to increase 0.3% in August.
Other Markets: European indices closed higher on Friday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.58%, 1.06%, 0.88% and 0.82%, respectively.
Ireland’s BNP Paribas Real Estate construction PMI rose to 48.6 in September, from 44.9 in August. The latest reading still signalled a contraction for the third straight month, which exerted pressure on the EUR/USD forex pair.
China’s foreign exchange reserves slipped to $3.12 trillion at the end of September, from $3.16 trillion a month ago. The recent reading came mostly in-line with market expectations and sent the CNY/USD pair slightly higher in forex trading this morning.
Colombia’s annual inflation rate eased to 10.99% in September, from 11.43% in the earlier month. This was in-line with market estimates of 11% and lent support to the COP/USD forex pair.
UK’s Halifax House Price Index declined by 4.7% year-over-year in September. This being the biggest decline since August 2009 sent the GBP/USD pair lower in forex trading this morning.
Germany’s industrial production, Singapore’s foreign exchange reserves, Mexico’s inflation rate, France’s new passenger car registrations, as well as Central Bank of Brazil’s focus market readout.
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