by Global stocks experienced a major rally on Friday, but the US Dollar drew back from a high level of 24 years against the Yen. These events followed the publication of the US jobs report. It eased investors’ concerns about the Federal Reserve’s hawkish interest rate increments.
More Jobs Enter the US Economy
The US economy got to hire a lot more people than was speculated in August. The income growth was averagely maintained while unemployment rose to 3.7%. These reports could, in turn, ease the Federal Reserve’s pressure to implement a 75 basis point rate increment.
It made investors excited, and the result was immediately seen as the Dow Jones index rose by 1% value and S&P 500 followed suit by adding 1.2%. Nasdaq also did a 1.2% growth like S&P 500.
Improved reports as were seen on Friday would take away the need for the Federal Reserve to call high rates. The market maintained concerns that continuous high rates might end in a recession.
The stock market across Europe had a 2% jump from the low levels it left off on Thursday. The British FTSE, on the other hand, secured a 1.8% gain.
As a result of market jumps around the globe, the MSCI index equally made a jump to add 1.2%. It is, however, doing a 1.9% low on the week and it becomes its third consecutive losing week.
COVID in China and Investor Concerns
Renewed lockdown due to COVID in China added to the intense worries about global economic growth. The high cost of energy resulting from the war in Eastern Europe is putting much economic pressure on Europe.
The financial market was focused on receiving the US report and seeing how it will affect the Fed’s rate decisions. The market already had expectations of seeing high rates from the Federal Reserve since Powell’s comments at the Jackson Hole conference. The recent slow economic growth in China and the Eurozone fears of a recession were part of the general concerns of the market.
As for equity funds, this became their fourth-largest week of outflow this year. But investors pulled out funds from bonds for the second week.
There is an increasing fear of a recession all over Europe as activities in the manufacturing sector decline. Customers are cutting down their purchases due to the high cost of living.
