📆 Friday, April 5
► European markets saw a notable decline, with the Stoxx 600 dipping more than 1.1%, reflecting widespread unease across global markets. This movement comes ahead of pivotal US jobs data expected to influence the Federal Reserve's rate trajectory. Factory orders in Germany rose slightly but still fell short of expectations. Construction PMI in the Eurozone also declined. Markets await the release of Eurozone retail sales and US jobs data (NFP later today.
► In the US, stock futures suggest a potential recovery from Thursday's downturn in the S&P 500, even as the market absorbs Federal Reserve officials' cautious stance on rate cuts. Investor focus is shifting towards the upcoming US jobs data, anticipated to reveal an addition of over 200,000 new payrolls for March. A robust jobs report may signal the Federal Reserve to maintain higher interest rates longer than some investors hope. However, the Fed highlighted the possibility that rate reductions might not occur this year if inflation does not significantly decelerate, underscoring the Fed's watchful approach to monetary policy adjustments. These sentiments cast a shadow over traders' expectations for rate cuts, intensifying the focus on the forthcoming jobs report and inflation data as critical indicators of the economy's health and the Fed's next moves. However, our Chief Analyst Robert Lindner believes that the current debate about whether rates will be cut in June or later this year and whether there will be one or three rate cuts is overblown – the US economy does not need rate cuts and conditions are not as the Fed would like them to be – so the Fed is likely to cut less and later than the markets expect.
► Asian markets experienced a downturn, with the region witnessing notable declines amidst regional uncertainties, including Taiwan's significant earthquake and its potential impact on semiconductor production. This nervous sentiment was further compounded by anticipation of key US economic reports and ongoing concerns over the Chinese economy's recovery momentum. China markets are closed for today for a public holiday. In Japan, the JPY showed resilience, buoyed by the Bank of Japan Governor's hints at further rate hikes, offering a glimmer of hope for currency stabilization amidst market volatility. Japan also reported a decrease in household spending.
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