On May 3, local time, the U.S. April non-farm payrolls report data was significantly lower than expected, which reheated the Fed's interest rate cut expectations and rekindled the market's hopes for interest rate cuts in the third quarter.
European and American stock markets collectively closed higher, the three major U.S. stock indexes all rose more than 1%, the Nasdaq and the S&P 500 index closed up for two consecutive days, and the Dow rose for three consecutive days. Technology stocks and chip stocks performed strongly, among them, Apple rose 5.97%, the biggest one-day increase in nearly a year and a half.
Popular Chinese concept stocks continued to rise, and the Nasdaq China Golden Dragon Index closed higher for three consecutive days, refreshing the closing high since October 2023. The offshore renminbi rose more than 400 points against the US dollar at one point, rising above 7.17 for the first time since January 25.
The non-farm payrolls report rekindled hopes of a Fed rate cut
According to the data, the seasonally adjusted non-farm payrolls in the United States increased by 175,000 in April, with an expected increase of 243,000, and the previous value was revised upward from an increase of 303,000 to an increase of 315,000. The U.S. unemployment rate was 3.9% in April, with an expectation of 3.8% and a previous value of 3.8%. The U.S. non-farm payrolls for April came in sharply lower than expected, and the unemployment rate did not stabilize in April, but edged up to 3.9%.
In addition, the report also shows signs of cooling inflation. The average hourly wage in the United States rose by 3.9% year-on-year in April, with an expected increase of 4.0% and a previous increase of 4.1%.
The jobs report has rekindled expectations of a Fed rate cut, reviving hopes of a rate cut in the third quarter. Following the report, traders increased their bets on a rate cut in September, with the expected rate cuts to start as soon as possible from November to September before the report, and swap contract pricing reflected that traders expected a rate cut this year to pick up to about 50 basis points from about 41 basis points before the report.
Seema Shah, chief global strategist at Principal Asset Management, said the unexpected decline in employment data for the first time in months, as well as a decline in average hourly earnings growth, may explain why Fed Chair Jerome Powell remained dovish on Wednesday.
Jamie Cox, managing partner of Harris Financial Group, said: "The jobs report has softened across the board, which is generally positive for the market. Weak wage growth will help dispel fears of a massive rise in inflation. ”
Wells Fargo economists said the Fed is still likely to start cutting interest rates in September, and the U.S. April jobs report data showed that the job market remains tight, supporting a further slowdown in inflation. While a rate cut in June is unlikely, the first rate cut is expected in September.
After the release of the jobs report, the US ISM non-manufacturing index in April also fell short of expectations, falling below the watershed of 50 and entering contraction territory, falling to a four-year low. According to the data, the ISM non-manufacturing PMI in the United States in April was 49.4, a new low since December 2022, with an expectation of 52 and a previous value of 51.4.
European and American stock markets collectively closed higher, and technology and chip stocks performed well
After the release of the data, U.S. stocks opened higher and maintained their gains, with all three major stock indexes rising more than 1%. Wind data shows that as of the close, the Dow rose 1.18% to 38,675.68 points, the S&P 500 rose 1.26% to 5,127.79 points, the largest one-day increase since February 22, and the Nasdaq rose 1.99% to 16,156.33 points. The Nasdaq and S&P 500 closed higher for two consecutive days, and the Dow rose for three consecutive days.
Technology stocks rose across the board, with Apple once rising more than 8%, and finally closing up 5.97%, the largest one-day increase in nearly a year and a half, with a total market value increase of US$159.516 billion (a total of about 1,155.076 billion yuan) in one day.
Apple reported a decline in revenue in Greater China last quarter, and is expected to return to growth in total revenue this quarter, and will launch the largest buyback program in history of 110 billion US dollars (about 796.5 billion yuan), while raising the quarterly dividend by 4% to 25 cents per share.
This means that Apple has broken its previous record for the largest buyback size and achieved 12 consecutive quarters of dividend yield increases.
Netflix, Google, Microsoft, etc. rose more than 2%. Chip stocks performed strongly, with TSMC, Nvidia, ASML, Broadcom, Applied Materials, and Chaowei Semiconductor all rising more than 3%, Microchip Technology, Micron Technology rising more than 2%, and Intel rising more than 1%.
All three major European stock indexes closed higher across the board. Wind data showed that as of the close, the German DAX index rose 0.54% to 17,993.69 points, the French CAC 40 index rose 0.54% to 7,957.57 points, and the British FTSE 100 index rose 0.51% to 8,213.49 points.
Popular Chinese concept stocks continued to perform well
Popular Chinese concept stocks continued to rise, with the Nasdaq China Golden Dragon Index rising 1.73%, closing up for three consecutive days and refreshing the closing high since October 2023.
New Oriental, Trip.com Group, and NetEase rose more than 4%, Shell, Tencent Music, Zhihu, and Good Future rose more than 3%, Baidu, Alibaba rose more than 1%, and JD.com also rose. China's new energy vehicle stocks fell across the board, with Xiaopeng Motors and Li Auto falling more than 3%.
In terms of weekly performance, the Nasdaq China Golden Dragon Index has risen 5.53% this week after rising 8.84% last week.
On the exchange rate front, the U.S. dollar index (DXY) quickly extended its losses after the release of the jobs report, erasing all gains since the release last month of the U.S. CPI's larger-than-expected acceleration in March. On May 3, local time, at the close of the New York session, the U.S. dollar index fell 0.28% to 105.0851, the lowest intraday low at 104.5210, a new low since April 10.
Non-U.S. currencies rose intraday, and the offshore RMB exchange rate against the U.S. dollar once rose by more than 400 points, rising above 7.17 for the first time since January 25. At the close of the New York session, the offshore yuan rose 144 basis points against the dollar at 7.1916.
In addition, the yen regained 152 against the dollar for the first time in more than three weeks, rebounding more than 1% from the intraday low, getting rid of the risk that the Japanese government may intervene again this week. At the close of the New York session, the dollar fell 0.47% to 152.9745 against the yen, down 3.38% for the week.
Gold and crude oil dived after rushing higher
Among commodities, gold prices rose rapidly in the short term after the release of the U.S. jobs report, but then quickly turned lower and fell to a one-month intraday low. London spot gold was last reported at $2301.93 per ounce, down 0.05%; COMEX gold futures closed up 0.02% at $2,310.1 an ounce.
Some analysts said that despite the disappointing non-farm payrolls data in the United States in April, inflation is still too high for the Fed to cut interest rates at its next meeting, limiting the recent performance of gold prices.
From the perspective of weekly performance, London spot gold and COMEX gold futures fell by 1.53% and 1.58% respectively this week, both of which pulled back for the second consecutive week.
Xu Ying, chief analyst of macro strategy at the Orient Securities Derivatives Research Institute, said that the recent weekly pullback in gold prices is due to the easing of risk aversion caused by the risk of geopolitical situation on the one hand, and the lack of upward momentum on the other hand, and the phased pullback pressure brought by long profit-taking, but the market is not panicking or selling gold. In the short term, inflationary pressure in the United States still exists, and if you want to suppress inflation, you must maintain high interest rates, which has a weak impact on the supply side, and the economy is facing an increased risk of recession. In the short term, gold is under some pressure, but it still has upward momentum in the medium and long term.
After the release of the U.S. jobs report, international crude oil prices rose in the short term and refreshed new intraday highs, but then also fell and turned down. International oil prices fell across the board, with the June contract for U.S. oil falling 1.22% to $77.99 per barrel, and the July contract for Brent oil falling 0.98% to $82.85 per barrel.
(Note: The pictures in the article are all from Wind)
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