Global stocks rise as employment data in the US surpassed expectations
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Global shares closed higher on Friday as the US dollar plunged. The positive performance of the stock markets comes amid the release of solid job data, raising hopes that the US Federal Reserve will ease its monetary tightening policies.
Global stocks rose on Friday
On Friday, global shares traded green after the data on job markets was better than expected. The US Bureau of Labor Statistics said the economy had created 261,000 jobs in October.
The number of created jobs last month was higher than the estimated 200,000. Nevertheless, unemployment also increased to 3.7% compared to 3.5% in September. The wage inflation also dropped from 5% in September to 4.7% in October.
The positive data released has positively affected the US job markets. The MSCI index tracking the equities of 50 countries jumped by 1.72%, while European stocks also rallied. European stocks had plunged the previous day after the Bank of England also announced a hike in interest rates.
The three major indexes on Wall Street also closed higher. The S&) 500 gained 1.36%, Nasdaq Composite gained 1.28%, while the Dow Jones Industrial Average increased by 1.26%.
The employment report also caused the US dollar to drop, and the US dollar index (DXY) also turned bearish. On the other hand, the euro gained by 2.1%. The drop in the dollar caused over 2% gains for gold.
Other commodities, such as oil, also closed in the green. Oil prices increased by 5% amid expectations that the European Union will ban Russian oil. Investors are also concerned about the effects of China easing the COVID restrictions.
Fed’s aggressive interest rate hikes
The Fed has raised interest rates several times this year. the move has led to stocks dropping significantly this year as investors take their money out of risk assets. The most recent interest rate hike happened on Wednesday, with the Fed raising rates by 75 basis points again for the fourth consecutive time.
The hawkish stance taken by the Fed is meant to tame the inflation rates that jumped to 40-year highs in 2022. However, the aggressive hikes have also created concerns from economists who predict that the economy will enter into a recession if the rates are raised further.
There are expectations that the Fed will pivot and ease the interest rate hikes, which could enable the stock markets to recover from the massive losses seen this year. The next Federal Open Market Committee (FOMC) meeting is in December. During this meeting, there are expectations that the Fed will ease the rate at which it is hiking interest rates and possibly raises rates by 50 basis points.
