Marketmind: Jubilant markets eye jobs in June jump
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[June 02, 2023] A
look at the day ahead in U.S. and global markets from Mike Dolan
With the U.S. debt ceiling removed, world markets see the sky again -
encouraged that robust U.S. labor markets continue to defy recession
fears as interest rates near peaks.
May's U.S. employment report later on Friday now stands as the last
major data point of a shortened trading week in which June was greeted
with glee by global investors.
And judged by all the other labor market soundings this week, there are
few signs yet of any significant disturbance to the still-robust
employment picture. Another 190,000 payrolls are expected to have been
added last month.
And although markets could see the end of the debt limit saga late last
week, news on Thursday that the Senate joined the House in passing
legislation that lifts the ceiling and averts default has cleared the
decks of one major outside risk.
With Federal Reserve officials making noises about skipping a rate hike
this month as they assess a complicated macro picture, futures markets
have reverted to seeing less than a one-in-three chance of a June rate
rise.
And so after completing three consecutive monthly gains for the first
time since 2021, the S&P500 and Nasdaq surged to nine-month closing
highs on Thursday. Stock futures pointed to further gains on Friday.
Wall St's "fear index" - the VIX gauge of implied equity volatility -
hit its lowest level since November 2021 early on Friday.
The relief spread across world bourses, with MSCI's all-country stock
index adding another 0.5% on Friday and even Hong Kong's beaten down
Hang Seng bouncing back to record its best day in three months.
Reports that China is working on new measures to support the property
market, after existing policies failed to sustain a rebound in the
sector, helped the Hong Kong rally.
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An employee hiring sign with a QR code
is seen in a window of a business in Arlington, Virginia, U.S.,
April 7, 2023. REUTERS/Elizabeth Frantz
To the extent the dollar was bid by debt-ceiling stress and thoughts
of another June Fed hike, then it's fallen back again too.
Elsewhere, oil markets are closely watching the weekend OPEC
ministers meeting - although further production cuts are not
expected.
For inflation watchers, annual crude oil price declines are still
running at more than 30%.
And annual world food price declines are also running at more than
20% and hit their lowest in two years, according to The United
Nations food agency.
In stocks, Broadcom shares failed to gain despite the company
forecasting third-quarter revenue above market estimates on Thursday
amid massive corporate investments in AI-related technologies.
But Lululemon Athletica shares jumped 13% after the bell on Thursday
after it raised sales and profit forecasts as wealthy Americans snap
up its pricey activewear.
In politics, BRICS foreign ministersasserted their bloc's ambition
to rival Western powers but their talks in South Africa were
overshadowed by questions over whether Russia's president would be
arrested if he attended a summit in August.
Events to watch for later on Friday:
* U.S. May employment report
(By Mike Dolan, editing by Sharon Singleton; mike.dolan@thomsonreuters.com.
Twitter: @reutersMikeD)
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