Stocks and Yen shares were firmer on Friday ahead of the key U.S. non-farm payrolls numbers, with reassurance from the Federal Reserve that the next move in interest rates would likely be down. The yen’s recovery from 34-year lows was a major focus in Asia, following a tumultuous week of suspected intervention by Japanese authorities. Asian shares surged to their highest level in 15 months, driven by strong performance in tech and Hong Kong stocks.
U.S. Stock Markets and Federal Reserve’s Influence
U.S. stock index futures were stronger ahead of the payrolls report, with markets taking comfort in the Federal Reserve’s signal that the next rate move would be down. The Fed’s dovish tone, along with Apple’s announcement of a record $110 billion share buyback, provided a boost to Wall Street. This positive sentiment is underpinned by corporate earnings in the United States that have exceeded expectations, contributing to Thursday’s near-1% rally in the S&P 500.
Asian Markets and Yen Intervention
Asian shares surged to their highest level in 15 months on Friday, with the MSCI Asia-Pacific index reaching 550.49, its highest point since February 2023. Hong Kong’s Hang Seng Index rose 1.36%, marking its ninth consecutive day of gains and the longest winning streak since January 2018. The focus in Asia was on the yen, which recovered from 34-year lows, thanks to suspected intervention by Japanese authorities. Traders suspect that the Bank of Japan (BOJ) spent up to $60 billion to support the yen, leaving the dollar on the back foot.
European Markets and Corporate Earnings
European stocks also saw positive momentum, with the STOXX 600 index up 0.2% at 504.19 points. The Federal Reserve’s dovish stance, combined with strong corporate earnings in Europe, has contributed to the market’s resilience. European companies such as Societe Generale and Credit Agricole reported better-than-expected first-quarter results, adding to the overall positive sentiment.
Oil Prices and Commodities
Oil prices edged higher on Friday due to the prospect of OPEC+ continuing output cuts. However, crude benchmarks were headed for the steepest weekly losses in three months, driven by demand uncertainty and easing tensions in the Middle East, which reduced supply risks. U.S. crude rose 0.38% to $79.27 per barrel, while Brent crude was at $84.04, up 0.4% on the day.
U.S. Non-Farm Payrolls Expectations
The U.S. non-farm payrolls report is a critical factor for market sentiment. Economists surveyed by Reuters predict that non-farm payrolls likely increased by 243,000 jobs last month, down from 303,000 in March. The unemployment rate is expected to remain steady at 3.8%, with annual average earnings growth forecasted to cool to 4.0%. The outcome of this report will play a significant role in determining the direction of interest rates and broader market trends.
Dollar Index and Yen Movement
The dollar index, which measures the U.S. currency against six peers, was at 105.28 on Friday. The index is set to clock a 0.8% decline for the week, its worst weekly performance since early March. The yen, which started the week at a 34-year low
recovered to 153.300 per dollar, largely due to suspected intervention by Japanese authorities. This rebound has contributed to the dollar’s softer performance.
Asian and Hong Kong Stock Market Trends
Hong Kong’s Hang Seng Index’s nine-day winning streak is a significant highlight, reflecting the positive sentiment in Asia. The MSCI Asia-Pacific index’s strong performance is driven by the technology sector and the expectation of continued growth in China’s economy. This positive outlook has contributed to increased investment in Asian markets.
Spotlight on the Yen and Japanese Authorities
The yen’s rebound from 34-year lows has brought renewed focus on Japanese authorities’ interventions. With a series of Japanese public holidays and Monday’s holiday in Britain—the world’s largest FX trading center—trading desks are on high alert for further intervention by Tokyo. This potential for further action by the BOJ could lead to increased volatility in the forex market.
Conclusion
Global markets are steady ahead of the U.S. non-farm payrolls report, with the Federal Reserve’s dovish stance providing reassurance. The Stocks and Yen recovery from 34-year lows, due to suspected intervention, has influenced the broader forex market. Oil prices remain uncertain, while Asian and European markets are experiencing positive momentum. As investors await the payrolls report
market trends will continue to evolve based on key economic indicators and central bank policies.
FAQs
Q1: What is the expected outcome of the U.S. non-farm payrolls report? A1: The U.S. non-farm payrolls report is expected to show an increase of 243,000 jobs for April, down from 303,000 in March. The unemployment rate is forecast to remain steady at 3.8%, with annual average earnings growth cooling to 4.0%.
Q2: Why has the yen recovered from 34-year lows? A2: The Stocks and Yen recovered from 34-year lows due to suspected intervention by Japanese authorities. The Bank of Japan is believed to have spent up to $60 billion to support the yen
causing the dollar to lose ground.
Q3: How has the Federal Reserve’s signal that rates might go down affected the market? A3: The Federal Reserve’s dovish stance has provided reassurance to investors, contributing to a boost in Stocks and Yen index futures and a more positive outlook for the market. It has also influenced Treasury yields, which have fallen to three-week lows.
Q4: What are the key factors influencing oil prices? A4: Oil prices have edged higher due to the prospect of OPEC+ continuing output cuts. However
demand uncertainty and easing tensions in the Middle East have contributed to the steepest weekly losses in three months for crude benchmarks.
Q5: What is the significance of Japanese public holidays for the forex market? A5: Japanese public holidays, along with Monday’s holiday in Britain
could present a possible window for further intervention by Tokyo. This potential for action by the Bank of Japan has left trading desks on high alert
leading to increased volatility in the forex market.