- During Friday's session, we could observe increased volatility on various asset classes, which was related to the prospect of lifting the covid restrictions in China, as well as the publication of mixed US jobs report
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Wall Street indices erased early gains as investors drew conflicting conclusions from the latest NFP report, which showed that US employers hired more workers than expected in October but unemployment rose above analysts’ estimates.
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Also hawkish comments from two FED members weighed on market sentiment in the afternoon. Boston Fed President Collins hinted that the pace of future increases could be smaller, however she did not rule out another 75 bps hike in December. FED Barkin pointed out that the US central bank might need to raise rates above 5%.
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Bulls regained some ground in the evening after comments from FED Evans, who will retire after the new year. In his opinion it's likely Fed funds peak will be revised 'slightly higher' in December. If inflation reports are not favorable and the Fed still wants to hike expeditiously, they can do 50 bp, repeatedly. Even with smaller rate hikes, there is ample room to tighten monetary policy. When the Fed is closer to the peak policy rate, it may reduce rate increases by 25 bp, or risks may become two-sided.
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Currently Dow Jones and S&P 500 are trading 0.60% and 0.70% higher, while NASDAQ and Russell 2000 rose 0.50% and 0.20% respectively.
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European indices finished today's session sharply higher, with Dax added 2.51% led by basic resources shares. European bourses advanced for a third week in a row, up 1.5%, as investors digested ECB President Lagarde comments that the central bank is ready to tighten monetary policy faster if it sees signs of inflation becoming more persistent.
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Oil prices jumped more than 4.0% amid renewed speculation that China, which is the biggest oil importer, may ease covid restrictions. WTI is approaching $92.50 level, while Brent is testing $98.50 level.
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The dollar index weakened to below 111 on Friday, easing from its weekly highs of above 113. The Canadian dollar strengthened on Friday as the Canadian economy added 108.3K jobs in October, easily beating analysts’ estimates of 10K job gain, which raises odds for more rate hikes from BoC. Currently AUD and NZD are the best performing major currencies while USD and JPY lag the most.
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Weaker dollar provided support for precious metals. Gold rose nearly 3.0% and is at $1675 level, while silver surges over 6.0% and broke above $20.00 per ounce.
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Upbeat moods can be also spotted on the cryptocurrency market, where Bitcoin briefly jumped above resistance at $21,000, while Ethereum tested $1670 level.
Precious metals recorded heavy gains today amid a weaker dollar. Following the release of the US jobs report GOLD broke above the upper limit of the descending channel, and later in the session buyers pushed the price above the horizontal resistance zone at $ 1670, which may herald a continuation of the upward movement after the weekend. Source: xStation5
