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Good Fridays Positive NFP Report Led Stocks to Rally

April 5, 2021


Global stock prices climbed to a 1.5-month high early in Monday’s session after data showing a surge in US employment. However, short-dated US bonds came under pressure after worries that the Federal Reserve may bump up interest rates sooner than previously indicated.

• US S&P500 futures traded 0.5% higher, maintaining gains made during Friday’s session.
• Japan’s Nikkei rose 0.8%.

MSCI’s broadest index of Asia-Pacific shares outside Japan was almost flat, with China closed for Tomb-Sweeping day and Australia on Easter Monday.
MSCI’s all-country world index was almost flat but stood near its highest level since late February and within sight of a record high set that month.

The U.S. labour department said on Friday that non-farm payrolls (NFP) surged by 916,000 jobs last month, the biggest gain since last August. This was much greater than economists’ median forecast of 647,000 and was closer to markets’ speculated number of one million. Data for February was also revised higher to show 468,000 jobs created instead of the previously reported 379,000.

While employment remains 8.4 million jobs below its peak in February 2020, an accelerating recovery raised hopes the all the jobs lost during the pandemic could be recouped by the end of next year.

The prospects of a return to a full employment, in turn, raises question about whether the Fed can stick to its pledge that it will keep interest rates through 2023. Markets have strong doubts, with Fed funds futures fully priced in one rate hike by the end of next year.

• The two-year U.S. Treasury yield rose to 0.186%, near its eight-month peak of 0.194% touched in late February.
• 10-year notes yield slipping to 1.706% on Monday, giving up a part of its 4-basis-point rise made on Friday following the job report.

The strong jobs data helped to underpin the dollar.

• USD/JPY traded at ¥110.72, near Wednesday’s one-year peak of ¥110.97.
• EUR/USD stood at $1.1762.

In the crypto world:

• Ethereum (ETH/USD) held at $2,075.67 near Friday’s record peak of $2,144.99.
• Bitcoin (BTC/USD) stood at $58,146 after 4.3% gains last week.

Elsewhere:

• Oil prices dipped after OPEC+ agreed last week to gradually ease some of its production cuts between May and July.
• U.S. crude futures fell 0.5% to $61.16 per barrel.

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