Stocks rose globally, as a softer-than-expected U.S. labor market report on Friday led traders to revive bets that the Fed would ease monetary policy as early as September
A gauge of global stock markets rallied on Monday on hopes that major central banks will cut interest rates this year, while the yen weakened against the dollar after a surge last week from Japan’s suspected currency intervention.
Stocks rose globally, as a softer-than-expected U.S. labor market report on Friday led traders to revive bets that the Fed would ease monetary policy as early as September.
The dollar index was lower for a fourth consecutive session after Friday’s data showed the lowest jobs gain since October calmed any angst that the Fed might even raise again.
Fed Chairman Jerome Powell “told the market that a hike was unlikely. Those were his words, ‘unlikely,’ and therefore they took that to mean that he wants to cut”, according to Brad Conger, CIO at Hirtle Callaghan & Co in Conshohocken.
Nevertheless, the inflation outlook is still uncertain as the market hopes rates are restrictive enough to slow the economy and reduce the pace of price hikes, he added.
New York Fed President John Williams on Monday said that at some undefined point the U.S. central bank will lower its rate target, but for now monetary policy is in a “very good place,” while Richmond Fed President Thomas Barkin said the fight against inflation will likely require a hit to demand.
On Wall Street, the Dow Jones Industrial Average advanced 0.46%, the S&P 500 added 1.03% and the Nasdaq Composite gained 1.19%.
In Europe, the pan-regional STOXX 600 closed 0.53% higher on signs the ECB is more confident about lowering rates as euro zone inflation continues to decelerate, three ECB policymakers said.
Philip Lane, Gediminas Simkus and Boris Vujcic said separately that the inflation and growth data cemented their belief that euro zone inflation, which was 2.4% in April, will slow to the central bank’s 2% target by the middle of next year.
MSCI’s gauge of stocks across the globe gained 0.50% to end at 1,066.73, its highest since June 2022. Markets in Britain and Japan were shut for public holidays.
