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Stock Prices Rise Globally After US Jobs Data

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As investors continued to digest the US jobs report for July and assess what it implies for Federal Reserve policy and markets, the stock market began the week with a cautiously optimistic tone and inched its way up on Monday.

During the trading hours in Europe, US stock prices made a slight climb in the positive direction. Futures contracts on the S&P 500 were up 0.20 percent, futures contracts on the Dow Jones Industrial Average were up 0.16 percent, and futures contracts on the Nasdaq added 0.33 percent.

The unexpectedly robust data that was released on Friday indicated that the United States added 528,000 jobs last month. This is an indication that the labor market is doing well despite concerns about a slowdown in economic growth.

According to a statement made by a strategist at Deutsche Bank, Jim Reid, “the United States economy simply cannot be judged to be in a recession in a month when over 528,000 jobs have just been added as payrolls,”
However, given the current state of the job market, it is anticipated that wages will continue to rise at a rapid pace. This might very well persuade the Federal Reserve, which is now data-dependent, to maintain its aggressive policy of interest rate hikes.

Investors will keep a tight eye on the inflation data releases that are due later this week, with the July number for the Consumer Price Index scheduled to be released on Wednesday. This will provide investors with additional policy hints.

“With another 75 basis point rate hike next month now the preferred outcome, it could be a nervy couple of days for investors ahead of Wednesday’s inflation report,” Oanda’s senior market analyst Craig Erlam said. “Although a lot can change in that time, it could be a nervy couple of days for investors ahead of Wednesday’s inflation report.”

The employment report that was released on Friday helped boost global stock markets, as evidenced by the 0.16 percent increase in the MSCI World Index.
The rise was driven in large part by Europe, with the flagship index for the continent, the Stoxx 600, posting a 0.45% gain. The CAC40 index in Paris gained 0.51 percent, the DAX40 index in Frankfurt gained 0.30 percent, and the FTSE 100 index in London gained 0.30 percent.

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The session for Asian equities was more volatile than usual. The Shanghai Composite Index went up by 0.31 percent, but the Hong Kong Hang Seng Index went down by 0.77 percent. This occurred despite the fact that Hong Kong moved to reduce the necessary hotel quarantine period from one week to just three days. Tokyo’s Nikkei 225 climbed 0.26 percent .

Even though they fell on Monday, the major oil benchmarks were still trading above the six-month lows they set on Friday, as investors in commodities worried about the possibility of a recession. Brent crude declined 0.61 percent to $94.34 a barrel, while WTI crude slid 0.63 percent to $88.45 a barrel.

“The negative pressure on the oil price is coming exclusively from a weakening of demand forecasts,” said Sophie Lund-Yates, the lead equities analyst at Hargreaves Lansdown. This comes as markets prepare for a potentially steep economic recession. “Profits made as a result of the invasion of Ukraine have been completely wiped away at this point.”

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