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US job growth soars

Job creation in the US jumped in March, coming in well ahead of expectations, according to data released at the end of last week. The data lifted US equity markets to finish an otherwise bleak week. This week, investors will get an update on central banks’ thinking with interest rate decisions from the Bank of Canada (BoC) and European Central Bank (ECB) on Wednesday and Thursday, respectively. Inflation data out of the world’s two largest economies will also come on Wednesday and Thursday, providing insight into how well those country’s central banks have been able get consumer prices under control. Finally, the University of Michigan Consumer Sentiment Index will be released on Friday.

Shane Strowmatt, LGT
Reading time
5 minutes
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US nonfarm payrolls increased by 303,000 in March, clearly higher than market expectations and higher than February’s 270,000 revised figure. The unemployment rate, which was also part of the labour market report form the US Bureau of Labor Statistics, came down slightly to 3.8% in March from 3.9% a month earlier. Those figures have become the latest in a series of recent data that paint the picture of a resilient US labour market, such as last week’s ADP National Employment Report, which showed US payrolls increasing significantly in March. The strong labour market as well as sideways inflation data suggest the Federal Reserve (Fed) may take its time before lowering interest rates. The economy appears to be handling higher rates well as the Fed waits for inflation to slowly fall.

Markets in New York ignored the prospect of higher interest rates for longer and the major stock indices came roaring back from a week of losses to finish with solid gains during Friday’s session. The Dow Jones Industrial gained 0.8% on Friday for a loss of 2.3% during the week and the S&P 500 jumped 1.1%. The Nasdaq-100 surged 1.3%.

European markets didn’t take part in the sudden positive sentiment and were mostly lower to finish Friday’s session. The Euro Stoxx 50 made a mild gain while Germany’s DAX fell 1.3%, France’s CAC 40 lost 1.1% and Switzerland’s SMI dropped 1.7%.

In the Asia-Pacific region, stock markets were trading mostly higher ahead of this week’s central bank decisions and inflation data. In Tokyo, the Nikkei 225 gained 0.6% and in South Korea, the Kospi was trading up 0.2%. Australia’s S&P/ASX 200 was also 0.2% higher. Chinese markets were trading lower with Hong Kong’s Hang Seng Index down 0.4%, while the Shanghai Composite lost 0.1%.

In addition to the BoC and ECB decisions this week, the central banks of Korea, New Zealand, Thailand and the Philippines will all announce monetary policy decisions during the week. Markets don’t expect any of the central banks to cut rates at their April meetings, but cuts at the BoC and ECB are expected at the central banks’ June meetings.

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: Swiss unemployment rate, German industrial production, German trade balance, Sentix investor confidence for the euro area, Swiss National Bank Chairman Thomas Jordan speaks at “Towards the future monetary system” event in Zurich.


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