Global Markets Update: Stocks, Oil, Currency & Key Talking Points

Global Markets Draw Breath Amid Shifting Stocks, Oil, and Central Bank Moves

Market Overview and Key Developments

By Jamie McGeever

ORLANDO, Florida, May 7 (Reuters) – U.S. and global stocks hit new highs before ending lower on Thursday as chip stocks gave back some of their blistering gains, while oil clawed back earlier losses as doubts around a U.S.-Iran peace deal pushed Brent crude back above $100 a barrel.

In my column today, I look at the U.S. labor market ahead of April’s non-farm payrolls report on Friday. On the surface, it seems pretty solid. But as outgoing Federal Reserve Chair Jerome Powell said last week, it’s an “unusual and uncomfortable” balance.

If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.

Recommended Reading

1. Asia’s tech giants give AI bull run a new centre of gravity

2. EXCLUSIVE-Oil-price bets ahead of Iran war news totalled $7 billion, reporting shows

3. Japan keeps U.S. close as it signals unlimited yen defence

4. Trapdoor creaks for dollar if Iran war ends: Mike Dolan

5. Blackstone, BlackRock cut value of their private credit funds

Today’s Key Market Moves

Stocks and Sectors

• STOCKS: Asia up strongly, but many markets playing catch-up after holidays. EM stocks hit new highs. Europe -1%, UK -1.6%. Brazil -2.4%. Nasdaq -0.1%, S&P 500 -0.4%, Dow -0.6%.

• SECTORS/SHARES: Nine S&P 500 sectors fall, led by materials, industrials and energy. Tech and comms services up less than 0.1%.

Currency and Bonds

• FX: Dollar edges up, yen slips back toward 157.00/$, Norwegian crown hugs 3-year highs after surprise rate hike.

• BONDS: U.S. yields up 2-4 bps across the curve.

Commodities and Metals

• COMMODITIES/METALS: Oil slips, but rebounds sharply from earlier lows. Brent closes above $100/bbl. Silver +3%.

Today’s Talking Points

Central Bank Actions

Hawks Bare Their Talons

Norway’s central bank raised interest rates on Thursday to counter “too high” inflation, earlier than markets had expected. It is the second G10 central bank to tighten policy this year after the Reserve Bank of Australia, and it won’t be the last.

Policymakers seem more sensitive to the inflationary effects of the Iran war than the growth impact. Rates futures markets indicate the ECB and BOJ will hike next month, and the BoE and RBNZ in July. Much depends on whether a U.S.-Iran peace deal is struck, but right now, hawks are in the ascendancy.

Currency Trends

Yuan Direction

China’s yuan is going from strength to strength, at least against the dollar – it is the highest in over three years and poised to break through 6.80/$. This will help calm the waters ahead of U.S. President Trump’s visit to China next week, right?

Only so much. China-U.S. trade may be shrinking, but Beijing is under fire for its soaring total trade surplus ($1.2 trillion and rising) and role in re-igniting global imbalances. And it is still intervening heavily to slow the rise of the yuan, which critics argue is still undervalued by at least 20%.

Labor Market Insights

Jobs, Jobs, Jobs

U.S. non-farm payrolls data for April will be released on Friday, and on the surface at least, there is little to worry about. Quite the opposite – weekly jobless claims are the lowest since the 1960s, “JOLTS” hiring is at the fastest pace in six years, and the 4.3% unemployment rate is historically low.

While firing may be low, so is hiring. The “breakeven” rate of job growth required to keep the unemployment rate constant could even be negative. And then there’s the threat posed by AI. Will tech-related layoffs show up in the numbers?

What Could Move Markets Tomorrow?

• Developments in the Middle East

• Energy market moves

• China trade (April)

• Taiwan trade (April)

• Japan PMI (April, final)

• European Central Bank President Christine Lagarde and board members Luis de Guindos and Isabel Schnabel scheduled to speak

• Germany trade (March)

• Germany industrial production (March)

• Bank of England Governor Andrew Bailey speaks on global imbalances

• Canada unemployment (April)

• U.S. non-farm payrolls (April)

• U.S. University of Michigan consumer sentiment, inflation expectations (May, prelim)

• U.S. Federal Reserve officials scheduled to speak include Governor Lisa Cook in Senegal, and Chicago Fed President Austan Goolsbee, San Francisco Fed President Mary Daly, Vice Chair for Supervision Michelle Bowman, and Governor Christopher Waller at the Hoover Institution Monetary Policy Conference

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

(Reporting by Jamie McGeever; Editing by Nia Williams)