Wall Street climbed after a strong jobs report
But why didn’t the market panic on indications Fed will delay rates cut?
Gold and oil prices were down on Friday
The ASX is set to start the week on a high note as Wall Street rallied on the back of job numbers. At 8am AEDT, the ASX 200 index futures contract was pointing up by +0.5%.
On Friday, the S&P 500 rose by +1.11% , the blue chips Dow Jones index was up by +0.80%, and the tech-heavy Nasdaq lifted by +1.24%.
US traders hit the buy button after the US economy added 303,000 jobs in March, far more than the expectations of 205,000. At the same time, the US jobless rate slipped to 3.8% as participation rate rose.
Some experts warn that strong jobs figures like this one may not be good news for the market.
“This far stronger-than-expected jobs report, combined with a recent slew of data showing that inflation remains sticky, further exacerbates our expectation that the Fed will continue to be cautious with rates,” said de Vere Group’s Nigel Green.
“We expect that there will be a maximum of one rate cut this year – in the third quarter – followed by a pause in order to reassess the impact on the world’s largest economy.”
Others are however more optimistic.
“The US stock market is up +US$10trn over the past five months, which is a significant wealth gain for household balance sheets,” said a note on Slock.
“IPO activity is coming back and M&A activity is coming back. These factors will all support consumer spending, capex spending, and hiring over the coming quarters.”
To stocks, Trump Media fell -12% on no news. According to its filing last week, the company reported sales of just over US$4 million as net losses reached nearly $60 million for the full year.
Tesla slumped further, this time by -3.6% after a report on Reuters suggested the company has scrapped its plans for a more affordable EV.
Krispy Kreme surged +7% after Piper Sandler upgraded its rating on the company from Neutral to Overweight, citing the recent partnership with McDonald’s.
Why didn’t the market panic after the strong jobs data?
The US jobs market is still red-hot, but why hasn’t the latest report made investors nervous that it might stop the Fed from cutting rates?
Because the report also found more Americans have joined the workforce.
According to the jobs report, 469,000 people entered the jobs market looking for work in March, raising the labor force participation rate from 62.5% to 62.7%.
The participation rate is a crucial metric, because a high rate indicates a robust jobs market and a strong economy.
On the other hand, a decreasing participation rate alongside a falling unemployment rate might indicate discouraged workers leaving the labour force, which could mask underlying weaknesses in the economy.
In other markets …
Gold price was down -0.9% to US$2,308.35 an ounce.
Oil prices also fell around -0.9%, with Brent now trading at US$90.37 a barrel, which still near its multi-month high.
The benchmark 10-year US Treasury yield rose by 7bp (bond prices lower) to 4.38%.
Iron ore futures fell a further -0.90% to S$96.85 a tonne.
The Aussie dollar slumped by -0.3% to US65.69c after the strong jobs report lifted the USD against major currencies.
Bitcoin meanwhile rose +1% in the last 24 hours to US$69,202.
5 ASX small caps to watch today
Syrah Resources (ASX:SYR)
Syrah says it has sold and delivered a 10kt break bulk shipment of natural graphite fines from its Balama Graphite Operation in Mozambique to PT Indonesia BTR New Energy Materials in Indonesia. This is the company’s first large volume natural graphite sale to a battery supply chain participant destination outside China. Syrah says the sale is further development in the company’s strategy to transition Balama natural graphite sales to a more geographically diversified and commercially aligned customer base.
Far East Gold (ASX:FEG)
FEG announced that initial assays of drill core from the first ever drill hole at the Aloe Rek prospect area in the company’s Woyla Copper Gold Project have confirmed high-grade gold within the Victory vein system. Detailed field mapping across the Woyla tenement have confirmed an increase of 5,500m in the strike length of the project’s low sulphidation epithermal vein system from 13,000m to 18,500m.
Cygnus Metals (ASX:CY5)
First assays from Pegasus have confirmed a thick, shallow and strongly mineralised intersection of 43.7m at 1.15% Li2O. Recent drill result from Pegasus is comparable to major deposits in James Bay and demonstrates the opportunity at the Auclair project. Drilling is expected to resume this quarter.
Red 5 (ASX:RED)
RED has achieved gold production of 50,132 ounces for the March quarter from the King of the Hills Gold Project – its fourth consecutive quarter of production exceeding 50,000 ounces. Production for FY24 to date stands at 158,158oz, leaving the company well placed to deliver full year production at the top end of annual gold production guidance for FY24 of 195,000 – 215,000 ounces.
Silver Lake Resources (ASX:SLR)
Sales for the March quarter were 64,463 ounces of gold and 338 tonnes of copper. For YTD FY24, sales were 187,244 ounces of gold and 872 tonnes of copper, with 179,439 ounces gold and 872 tonnes copper sales from the Western Australian operations. Both the Mount Monger and Deflector operations performed strongly through the quarter, with both operations well positioned to meet the top end of their respective guidance ranges.
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