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Solid US employment growth, a glimmer of hope in tariff dispute and upcoming central bank decisions

Market sentiment was driven by a better-than-anticipated US jobs report and optimism as China had announced that it is evaluating the possibility of initiating trade negotiations with the US. The Dow in New York jumped 500 points on Friday and recorded its ninth consecutive day of gains. In the eurozone, core consumer prices inched higher in April, questioning the outlook for further ECB rate cuts. Looking ahead on this week, central banks’ monetary policy announcements will be in the focus, with the highlight on the Federal Reserve’s interest rate decision on Wednesday. 

  • Date
  • Author Alessandro Fezzi, LGT Research Content & Publications
  • Reading time 5 minutes

US China trade negotiations
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US nonfarm payrolls increased by 177,000 in April, surpassing economists' forecasts of 138,000, according to the Labour Department's data released on Friday. However, this figure marks a decline from the revised 185,000 jobs added in March. The unemployment rate remained steady at 4.2%, while average hourly wage growth slowed to 0.2% from 0.3% in March. Despite the job growth, economic concerns persist due to recent drops in job openings and a contraction in factory activity and GDP.

On the New York stock exchange indices posted significant gains on Friday as the Dow Jones Industrial Average surged 564 points, or 1.4%, closing at 41,317.43, recording a 3% weekly increase. The S&P 500 advanced 1.5% to 5686.67, marking its longest winning streak in over 20 years. At the end of last week, Apple and Amazon reported earnings that exceeded analysts' expectations yet revealed underlying weaknesses. Apple’s Services division missed revenue estimates, and Amazon's cloud unit saw slower growth for the third consecutive quarter. Both companies highlighted uncertainties surrounding tariffs and their potential impact on future performance.

Trump urges Fed to cut rates after jobs report

US President Donald Trump called on the Fed to lower interest rates following a robust jobs report for April. The nonfarm payrolls report exceeded expectations, prompting Trump to argue that consumers have long awaited lower prices and that inflation is not a concern. This latest plea underscores Trump's ongoing pressure on the Fed to adopt a more accommodative monetary policy.

Stocks in the Asian-Pacific region start the week mixed

Australian stocks declined on Monday following Prime Minister Anthony Albanese's re-election, with the S&P/ASX 200 dropping 0.8%. The Australian dollar appreciated by 0.3% against the US dollar, while several other Asian currencies also strengthened. Major markets in Japan, China, Hong Kong, and South Korea were closed for public holidays, resulting in low trading volumes, while investors are closely watching upcoming US-China trade talks and Chinese economic data expected this week.

China considers trade talks with US

China's commerce ministry announced on Thursday that it is evaluating the possibility of initiating trade negotiations with the US, following multiple recent overtures from senior US officials. Beijing emphasised that any meaningful talks would require the US to remove all unilateral tariffs, which currently stand at 145% on Chinese goods. Analysts noted that while both nations appear willing to engage, achieving a comprehensive deal will be complex and time-consuming.

Higher euro-area core and services inflation clouds ECB rate cut outlook

Inflation in the eurozone remained at 2.2% in April, according to Eurostat data released on Friday, contrary to economists' expectations of a slight decrease to 2.1%. Core inflation rose to 2.7% from March's 2.4%, driven partly by Easter timing effects. The closely watched services inflation print also picked up again, coming in at 3.9% compared to the previous 3.5% reading. The higher inflation readings dampen the possibility of further interest rate cuts by the European Central Bank, which last reduced its monetary policy in April.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from BioNTech, CRH, Ford Motor und Berkshire Hathaway.

Economic data in focus: Swiss Consumer Price Index (08:30), Sentix investor confidence for the eurozone (10:30), US ISM Services Purchasing Managers’ Index (16:00).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.