Strong employment data reduced expectations of imminent Fed easing

On Wednesday, the US stock market closed with a decline. The Dow Jones Index (US30) lost 0.13%, though it hit a new all-time high at the session opening. The S&P 500 (US500) edged down by 0.01%, and the tech-heavy Nasdaq (US100) closed 0.16% lower. Strong employment data (NFP growth of 130k and a decrease in unemployment) confirmed the resilience of the labor market and lowered expectations for an early easing of Fed policy. Non-Farm Payrolls rose by 130k due to private sector support, more than double the expectations, while the unemployment rate unexpectedly fell.

Stock markets in Europe mostly declined yesterday. The German DAX (DE40) dropped by 0.53%, the French CAC 40 (FR40) closed down 0.18%, and the Spanish IBEX 35 (ES35) fell 0.43%. Conversely, the British FTSE 100 (UK100) closed 1.14% higher. European indices ended Wednesday without a clear trend amid mixed corporate earnings reports. Siemens Energy surged 8.5% due to a nearly threefold increase in profit, and Ferrari rose by more than 4%.
Platinum prices (XPT) are holding just above $2,100 per ounce, remaining under pressure near annual lows. Weak demand for autocatalysts and rising US yields are offsetting the impact of mining restrictions in South Africa, while existing inventories and recycling mitigate deficit risks. Additional pressure comes from strong US labor market statistics and expectations of delayed Fed rate cuts, which support the dollar and reduce investment interest in precious metals.

WTI prices rose more than 1% to above $65 per barrel, approaching highs not seen since September amid intensifying tensions surrounding Iran. The market is reacting to reports of a possible tightening of the US stance, which could jeopardize oil supplies if negotiations fail. However, gains were limited by EIA data showing US crude inventories increased by 8.5 million barrels – the highest jump in a year. Investors are also awaiting reports from OPEC and the IEA, where signals of a possible supply surplus this year are expected.

Asian markets rose confidently on Wednesday. While Japan’s Nikkei 225 (JP225) did not trade, the Chinese FTSE China A50 (CHA50) fell by 0.22%, Hong Kong’s Hang Seng (HK50) gained 0.31%, and the Australian ASX 200 (AU200) posted a positive result of 1.66%.

On Thursday, the offshore yuan (CNH) strengthened beyond 6.89 per dollar, extending its winning streak to a sixth session and hitting its highest level since May 2023. The currency is supported by statements from Xi Jinping regarding the ambition to elevate the yuan’s global status as a reserve currency. Since the beginning of last year, the dollar has weakened against the yuan by approximately 6%. However, growth is limited by the People’s Bank of China’s “moderately dovish” stance and weak inflation data: in January, CPI slowed to 0.2%, and producer price deflation narrowed to 1.4% – a one-and-a-half-year low.

The Australian dollar (AUD) rose above $0.71, reaching a three-year high following hawkish signals from the RBA. Governor Michele Bullock stated a readiness for further rate hikes if inflation remains persistent, emphasizing that figures “starting with a three” are unacceptable. Inflation expectations rose to 5% in February, strengthening hawkish sentiment. The market is now pricing in the probability of a rate hike in May.