Global stock markets declined on Monday as the U.S. dollar surged to its highest level in over two years, following stronger-than-expected U.S. jobs data that dampened hopes of further interest rate cuts by the Federal Reserve, Reuters reports.
The dollar index rose 0.23 per cent to 109.91, peaking at 110.17, signalling investor confidence in the greenback.
The December U.S. jobs report revealed an unexpected addition of 256,000 nonfarm payrolls, significantly exceeding forecasts of 160,000. This marked the largest gain since March and heightened concerns about inflation, as investors speculated that the Federal Reserve might be done with rate cuts for now. U.S. Treasury 10-year yields hit a 14-month high at 4.799 per cent before retreating to 4.788 per cent.
According to Reuters, the S&P 500 declined 0.43 per cent to 5,801.96, while the Nasdaq Composite dropped 1.10 per cent to 18,951.26, led by losses in the technology sector. However, the Dow Jones Industrial Average rose 0.46 per cent to 42,131.46, buoyed by gains in industrial stocks.
European and global markets followed suit, with MSCI’s gauge of stocks across the globe losing 0.62 per cent to 828.72, and the STOXX 600 index falling 0.44 per cent. Investor focus now shifts to the U.S. Consumer Price Index data due on Wednesday, which is expected to show an annual rise of 2.9 per cent and a monthly increase of 0.3 per cent. Producer price data is also due on Tuesday.
Commodities saw mixed performance, with U.S. crude oil prices rising 2.42 per cent to $78.42 per barrel and Brent crude gaining 1.6 per cent to $81.04 per barrel. In contrast, gold prices dropped 0.7 per cent to $2,670.86 per ounce, pressured by the strengthening dollar.
The dollar also impacted currencies, with the euro falling 0.44 per cent to $1.0199 and the dollar slightly weaker against the yen, trading at 157.56.
Reuters added that market analysts pointed to uncertainty over incoming U.S. President-elect Donald Trump’s economic policies, including potential tariffs, migration reforms, and tax cuts, as key drivers of market volatility. These factors, combined with rising energy prices, have stoked fears of persistent inflation, leaving investors wary ahead of further economic data releases.
“Investors also worry whether inflation could pick up as a result of the policies on tariffs, migration, and taxes of U.S. President-elect Donald Trump’s incoming administration.”
The PUNCH reported that global stock markets faced downward pressure on Thursday, as the recent surge in inflation and a widespread bond selloff continued to affect investor sentiment, Reuters reported.
