- S&P futures pointed to a sharply higher open, following upbeat jobs report.
- The key monthly non-farm payrolls data showed that employers added more jobs than expected in September.
- Payrolls increased by 254,000 jobs last month, higher than the predicted 140,000 hirings.
- The unemployment rate fell to 4.1%, from 4.2% in August.
- The dollar gains ground on expectations the Fed will opt for a smaller interest rate cut in November.
Susannah Streeter, head of money and markets, Hargreaves Lansdown:
“The US jobs market appears to have been infused with confidence in September, with new hirings shooting past expectations and the unemployment rate edging down. Fed policymakers had been worried about the potential for the jobs market to rapidly cool off, which is why they opted for a super-size rate cut last month. These latest numbers will help assuage those worries and add to a picture of a resilient US economy, which appears to be heading for a soft landing.
Financial markets are pricing in the chances of a cut in November at 93%, but are putting bets on a more usual 0.25% reduction. As expectations have retreated for a bigger rate cut, it’s helped push the dollar to a seven-week high, and Wall Street looks set to end the week on an upbeat note. With companies remaining positive and hiring more staff, and fresh interest rate cuts in sight, hopes are rising that the US economy will be blessed with a goldilocks scenario, with growth being maintained, as inflationary pressures are tamed. The brighter picture emerging for the US economy has also lifted shares in London, with the internationally focused FTSE 100 reversing earlier losses.
However, policymakers will still want to keen a keen eye trained on the risks of an upswing in inflation, prompted by higher energy prices, given the highly unstable situation in the Middle East. Although Brent Crude, the benchmark, has erased some of today’s gains, it’s still trading above $78 a barrel, at highs not seen since the end of August. Israel has intensified its strikes on targets in Beirut, undeterred by Iran’s rocket attacks. Reports that the US is also discussing the potential for Israel to target Iran’s oil sites, is also keeping upwards pressure on prices. However, OPEC+ members look set to keep to planned production increases in December, and Libya’s oil production has resumed after distribution caused by governmental fracture. These factors are helping keep a lid on prices, which for now will help dampen inflation concerns.’’
