Stocks enjoy a bounce from rate-cut fever

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LONDON, May 10 - Global shares rose to one-month highs on Friday while the dollar held steady, giving commodities a boost, after softer U.S. jobs data gave investors confidence that interest rates will start to decline this year.

Rather than putting the brakes on the stock market, the numbers are giving investors confidence in the ability of the Federal Reserve to cut interest rates this year, as central banks in Europe have started to lower borrowing costs. Thursday's weekly jobless data followed last week's report that showed U.S. job growth slowed more than expected in April and the increase in annual wages fell below 4.0% for the first time in nearly three years.Markets will be closely watching the April U.S. producer price index and the consumer price index out next week for signs that inflation has resumed its downward trend towards the Federal Reserve's 2% target rate.

BOE Governor Andrew Bailey said there could be more reductions than investors expect, the latest sign of the growing divergence between the Europe and U.S. rate outlooks.Traders currently anticipate roughly 45 basis points of cuts this year from the Fed. In comparison, traders are pricing in 58 bps of easing from the BoE this year, while anticipating 70 bps of cuts from the ECB. , ,

On Friday, the yen was last at 155.74 per dollar, with Japan's Finance Minister Shunichi Suzuki repeating Tokyo's recent warnings that it was ready to take action against disorderly currency moves.

 

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