On Friday, the bond yields and stocks in the Euro zone saw a sharp rise following the release of data showcasing robust job growth in the US for September. This development reduced the possibility of severe rate cuts from the Federal Reserve.
The European Union sanctioned an increase in tariffs on electric vehicles hailing from China. French President, Emmanuel Macron, stated that it’s time for an overhaul in Europe’s economic framework.
In Irish banking, Friday’s close saw AIB record a 1.2% increase, finishing at €4.87 a share. Bank of Ireland and Permanent TSB also saw a similar trend with rises of 1.08% and 0.59% ending at €9.38 and €1.7 respectively. The Irish aviation industry represented by Ryanair experienced an increase of 2.94%, closing at €16.47. Conversely, Kerry Group from the food supply sector faced a slight drop of 0.77% concluding at €90.40.
In London, the FTSE 100 ended the day marginally lower amidst fluctuating oil prices and a surge in US employment. It was slightly bolstered by NatWest, Barclays, and Lloyds, all experiencing a rise following the release of data showing that the US economy added 254,000 jobs in the past month. This figure is significantly more than the expected 147,000. This eased any potential fears of an economic downturn in the US, consequently driving up UK bank stocks.
Susannah Streeter, finance and markets leader at Hargreaves Lansdown, expressed that increased positivity surrounding company growth, combined with expected interest rate cuts, fuelled optimism for a balanced state in the US economy. This, combined with restrained inflation rates, keeps growth intact.
Additionally, the improved outlook on the American economy had a positive effect on London shares, as the FTSE 100 was able to minimise early losses. The Brent Crude futures saw a 0.657 % rise to $78.130, due to ongoing conflicts between Israel and Iran, creating concerns over possible supply challenges.
On Friday, the European Union took a major step against China by implementing tariffs on electric vehicles, potentially prompting reciprocal actions and negatively impacting home consumers and firms. The EU endorsed this tariff hike of up to 45%, asserting that Beijing unfairly supports its auto manufacturers. In doing this, the EU is aligning with America’s robust stance against Chinese trading habits while intending to adhere to International Trade Association rules.
Emmanuel Macron, the President of France, cautioned this week that there is a need to revamp Europe’s economic framework. He implied that overlooking America and China’s higher domestic investments and market safeguards could pose a crucial threat to the EU. The leaders of the EU are projected to present a novel competitiveness strategy in the following month.
Meanwhile, in New York, the arguments for solid US economic development received a shot in the arm on Friday when employment market figures significantly surpassed estimations. Despite recent instability triggered by escalating political unrest in the Middle East, the S&P 500 has jumped 20% this year to a level close to record highs.
The upcoming week will see a critical assessment for the rally as corporate results start coming in. To maintain valuations that have steadily increased in recent months, firms require to display robust profit growth as well as promising outlooks for the forthcoming year. The S&P 500’s current trading level, which is close to its peak in three years and significantly higher than its historical average, according to LSEG Datastream data, reflects this.
On Wednesday, UBS equity strategists stated in a report that earnings for the S&P 500 likely rose by 4.7% in the third quarter compared to last year. However, including the customary rate of positive earnings surprises, they suggested that earnings probably increased by 8.5%.
Next week, new data on US consumer prices, coming after positive employment data from Friday, will provide investors with an update on the economy. Should these numbers outperform expectations, they could further scale back predictions for the degree in which the Federal Reserve is expected to reduce rates over the subsequent months.
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