Emmanuel OchayiGlobal stock markets experienced a notable decline on Monday as the U.S. dollar surged to its highest level in over two years. This movement came after the release of stronger-than-expected U.S. jobs data, which dampened hopes for further interest rate cuts by the Federal Reserve.
According to Reuters, the U.S. dollar index rose 0.23 per cent to 109.91, peaking at 110.17. The December U.S. jobs report showed an unexpected addition of 256,000 non-farm payrolls, significantly exceeding the forecast of 160,000. This marks the largest gain since March and raises concerns about inflation. Investors are now speculating that the Federal Reserve might be done with rate cuts for the foreseeable future.
Join our WhatsApp ChannelThe report added that U.S. Treasury 10-year yields hit a 14-month high at 4.799 per cent before settling slightly lower at 4.788 per cent.
Impact on Major U.S. Stock Indices
The stronger dollar and job data had an immediate impact on U.S. stock indices. Reuters reported that the S&P 500 declined by 0.43 percent to close at 5,801.96.
The Nasdaq Composite dropped more sharply, losing 1.10 percent to end at 18,951.26, with significant losses in the technology sector. In contrast, the Dow Jones Industrial Average managed a slight gain, rising 0.46 per cent to 42,131.46, driven by positive performances in industrial stocks.
European and Global Markets Follow U.S. Trends
European and other global markets mirrored the declines seen in the U.S. The MSCI’s gauge of stocks across the globe dropped by 0.62 percent to 828.72. Similarly, the STOXX 600 index in Europe fell by 0.44 per cent.
READ ALSO: Global Stock Market Surges After US Federal Reserve Rate Cut
Investors are now turning their attention to upcoming U.S. Consumer Price Index (CPI) data, which is expected to show an annual rise of 2.9 percent and a monthly increase of 0.3 percent.
Commodity Prices Show Mixed Reactions
The commodity market presented a mixed picture. U.S. crude oil prices rose by 2.42 percent to $78.42 per barrel, while Brent crude gained 1.6 percent to reach $81.04 per barrel.
However, gold prices faced downward pressure, dropping 0.7 percent to $2,670.86 per ounce. Reuters highlighted that the strengthening dollar was a key factor contributing to the decline in gold prices.
Currency Markets Respond to Dollar Strength
The dollar’s strength also impacted global currency markets. Reuters noted that the euro fell by 0.44 percent to $1.0199. Meanwhile, the dollar showed slight weakness against the yen, trading at 157.56 yen.
Concerns Over U.S. Economic Policies
Market analysts pointed to uncertainty regarding the economic policies of the incoming U.S. President-elect Donald Trump. Potential tariffs, migration reforms, and tax cuts are seen as key drivers of market volatility.
“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,” Reuters reported.
Global Stock Market Reactions
Countries around the globe saw their stock markets respond to these developments. Here’s a brief overview:
- United States: S&P 500 down 0.43%, Nasdaq Composite down 1.10%, Dow Jones up 0.46%.
- Europe: STOXX 600 index down 0.44%.
- Global: MSCI’s global stock gauge down 0.62%.
Outlook for Future Data Releases
Investors are closely monitoring the upcoming U.S. Consumer Price Index (CPI) and producer price data. These figures are expected to provide further insights into inflation trends and potential future actions by the Federal Reserve.
Reuters concluded that market participants remain cautious, with rising energy prices and uncertainties around U.S. economic policies adding to the complexity of the current financial landscape.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
