Jobs Test Fed on the strength of the U.S. labor market will be put to the test on Friday with the release of the April employment report, which could impact Wall Street’s recent relief following the Federal Reserve’s policy meeting. However, Apple’s massive $110 billion stock buyback program, the largest in the company’s history, has provided a bullish boost to the market in advance. Here’s what you need to know about the key events influencing the markets.
Apple’s Massive Stock Buyback
Apple’s announcement of a $110 billion stock buyback program, along with a 4% increase in its dividend, was met with enthusiasm by investors. The news lifted Apple shares by 6% in after-hours trading and helped S&P 500 futures continue Thursday’s nearly 1% rally. Apple’s strong performance added momentum to the market ahead of Friday’s U.S. employment report, demonstrating the company’s influence on Wall Street.
Federal Reserve Meeting and Treasury Yields
This week’s Federal Reserve meeting provided a calming effect on the Treasury market, with the central bank quashing fears of another interest rate rise and surprising with a significant taper of its balance sheet runoff. As a result, futures markets have adjusted expectations, with full-year Fed easing now estimated at 40 basis points
10 basis points more than before the Fed meeting. Two-year Treasury yields have also fallen to three-week lows below 4.90%.
U.S. Labor Market and Non-Farm Payrolls
The upcoming April employment report is crucial in assessing the state of the U.S. labor market. Forecasts suggest non-farm payrolls will have risen by 243,000 last month, slightly lower than the 303,000 added in March. The unemployment rate is expected to hold steady at 3.8%, with annual average earnings growth predicted to cool to 4.0%. These results could determine the Federal Reserve’s future policy direction and influence market sentiment.
Influence of the Fed’s Policy on Markets
Federal Reserve Chair Jerome Powell stated that the central bank’s next policy move would likely be to lower rates
even if inflation remains higher than expected. This comment has led to a more relaxed view on interest rates, contributing to the recent market rally. Investors are now anticipating the U.S. employment report for further guidance on the Fed’s approach to monetary policy.
Cooling Inflation and Commodity Prices
Concerns over inflation appear to be easing, with U.S. crude oil prices falling below $80 per barrel for the first time in almost two months. Additionally, the United Nations’ Food and Agriculture Organization reported that its food price index ticked up in April but remains 7.4% below the level from a year earlier. This trend has contributed to a more optimistic outlook for market stability.
Dollar and Japanese Yen
The U.S. dollar has lost momentum following the Federal Reserve’s meeting
with a notable standoff between the dollar and Japanese authorities over the yen’s support. The Bank of Japan’s recent interventions
which totaled up to $60 billion in dollar sales, have buoyed the yen from its 34-year trough at 160 per dollar. This action has influenced the broader forex market and contributed to the dollar’s recent decline.
Asian Markets and Hong Kong’s Recovery
In Asia, Hong Kong stocks continued their impressive recovery
with the Hang Seng Index climbing 1.5% for a ninth consecutive day of gains. This upward trend is attributed to signs that China’s government is stepping up efforts to boost the economy
leading to increased bullishness among global hedge funds that use equities long-short strategies.
European Market Trends
In Europe, Norway’s crown rose after its central bank decided to keep its key policy interest rate on hold but indicated that a tight monetary policy stance may be needed for longer than anticipated. Meanwhile, European banks showed positive performance, with Societe Generale and Credit Agricole reporting better-than-expected first-quarter results.
Key Events and Economic Indicators
Key events to watch for in the U.S. market on Friday include the April employment report
ISM and S&P Global’s service sector surveys, and speeches from New York Federal Reserve President John Williams and Chicago Fed President Austan Goolsbee. Additionally, Japan’s finance minister Shunichi Suzuki is set to speak at a press conference, and Brazil’s president Luiz Inácio Lula da Silva is meeting Japan’s Prime Minister Fumio Kishida.
Conclusion
In summary, Apple’s record stock buyback program has provided a boost to the market
while the Jobs Test Fed Reserve’s recent meeting has calmed fears of another interest rate rise. However, the upcoming U.S. employment report will test Wall Street’s interest rate relief and determine the Fed’s future policy direction. With other key events and economic indicators to watch, investors should stay informed about the latest developments.
FAQs
Q1: How much is Apple’s new stock buyback program worth? A1: Apple’s new stock buyback program is worth $110 billion, the largest in the company’s history. The program is expected to provide significant value to shareholders.
Q2: What is the forecast for the U.S. April employment report? A2: The forecast for the April employment report predicts that non-farm payrolls will have risen by 243,000
with the unemployment rate holding steady at 3.8%. Average earnings growth is expected to cool to 4.0%.
Q3: How has the Federal Reserve’s recent meeting impacted Treasury yields? A3: The Federal Reserve’s recent meeting has led to a drop in Treasury yields, with two-year yields falling to three-week lows below 4.90%. This outcome has contributed to a more relaxed view on interest rates.
Q4: Why did the Bank of Japan intervene in the forex market? A4: The Bank of Japan intervened in the forex market to support the yen after it reached a 34-year trough at 160 per dollar. The interventions totaled up to $60 billion in dollar sales, aiming to stabilize the yen.
Q5: What are some of the key events to watch for in the U.S. market on Friday? A5: Key events to watch for on Friday include the April employment report, ISM and S&P Global’s service sector surveys
speeches by New York Federal Reserve President John Williams and Chicago Jobs Test Fed President Austan Goolsbee
and other financial news from Japan and Brazil.