Market developments
Equities:
U.S. stocks climbed on Friday after a stronger-than-expected March jobs report, but the S&P 500 is still headed for its biggest weekly decline since the first week of the year amid rising geopolitical concerns and hawkish signals from Federal Reserve officials. The Philadelphia Stock Exchange Semiconductor Index recovered from Thursday’s steep drop, with gains from chipmakers like Nvidia. However, the pullback has cast doubts over the fate of this year’s record-breaking rally in the S&P 500, which was powered by confidence that the central bank would cut rates later in 2024.
Fixed income:
Wall Street decided to focus on the positive aspects of the strong jobs report on Friday, believing that if the economy remains robust, the Federal Reserve may not feel as much pressure to ease monetary policy. This triggered a hawkish repricing in the bond market, with Treasury yields climbing as traders trimmed bets on a rate cut in June or July. The current view is that the exact number of rate cuts this year is less important than whether the Fed is in a rate-cutting mode at all. As a result, global yields ended the week higher and bond prices fell.
Commodities:
Gold prices have hit record highs, despite strong U.S. labour data and gains in the U.S. Dollar, highlighting gold’s status as a safe-haven asset. Strong U.S. jobs data and the Federal Reserve’s remarks have adjusted the outlook for future rate cuts, but geopolitical tensions and robust demand from China have bolstered gold’s market strength.