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Mixed reactions to economic data and political shifts

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2024-07-08

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The ASX is looking at a hesitant start to trading today for the second week of the new financial year, despite a rise in most global markets on Friday due to a dip in the US dollar and Treasury bond yields following the release of weaker June jobs figures.

The reaction to the jobs data saw the Aussie dollar rise to a near six-month high of close to 67.50 US cents and a small fall of 11 points in the share price index futures trading for today.

While the headlines were solid—206,000 new jobs last month—the jobless rate edged up to a near three-year high of 4.1%. Wage growth slowed, though it remains well above inflation, but there were significant downward revisions in previous monthly figures.

So much so that some US economists reckon the June report probably marks the downturn in the US labor force and considerably improves the chance of a rate cut from the Federal Reserve later this year.

On Friday, MSCI's gauge of stocks across the globe rose 0.34% to 817.96, a record high. On Wall Street, all three major indexes finished firmer, with the S&P 500 and Nasdaq scoring all-time closing highs led by communication services, consumer staples, consumer discretionary, and healthcare stocks.

The Dow rose 0.17% to 39,375.87, the S&P 500 gained 0.54% to 5,567.19, and the Nasdaq Composite climbed 0.90% to 18,352.76.

All three major indexes finished the week in the green. The Nasdaq was up 3.5% despite a weak week from Nvidia. The S&P 500 was up nearly 2%, while the Dow added almost 0.7% in a week shortened by Thursday’s Independence Day holiday.

The bragging rights for the biggest company by value stayed with Microsoft at $3.48 trillion (a record level) with a gain of 2.6% for the week.

Apple, though, closed the gap to end at $3.47 trillion, with a rise of 4.9% for the week.

Nvidia, the long-time boom stock, ended at $3.10 trillion, with the shares up just 1% for the week.

Benchmark 10-year Treasury yields slid following the release of the jobs data. The yield on benchmark US 10-year notes fell 6.9 basis points to 4.28%.

The Aussie dollar jumped by almost 1.4% over the week to Friday’s close of 67.49 cents—the highest since the start of January.

UK stocks started higher after the crushing win by Labour, but they then gave up earlier gains and finished lower after Keir Starmer became Britain's new prime minister. London's FTSE 100 index fell 0.45%. The index was still up half a percent for the week.

The STOXX 600 index still managed a weekly gain of around 1% despite all the uncertainty about the French elections.

Paris’s CAC 40, though, lost 0.26% on Friday ahead of yesterday’s second round. For all the angst and concerns about the rise of the right, the market managed a 2.6% gain over the week.

In currency markets, the dollar index fell slightly. The British pound gained ground after the British election results, the euro rose ahead of the French vote, and the dollar weakened against the yen before paring losses.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.28% to 104.87. Sterling strengthened 0.45% to $1.2815 and the euro was up 0.25% to $1.0837.

And to confound matters, the moderate candidate in Iran’s presidential poll won the second round on Friday, beating a hardline candidate.

Masoud Pezeshkian, the sole moderate in the original field of four candidates, beat hardline former nuclear negotiator Saeed Jalili, a staunch advocate of deepening ties with Russia and China and suppressing any sign of opposition or social protests.

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