Global Stocks Hit Record Highs Ahead of U.S. Jobs Data; UK Bonds Stabilize After Turmoil
Global stock markets surged to record highs on Thursday, buoyed by optimism ahead of the closely watched U.S. payrolls report and a breakthrough U.S.-Vietnam trade deal. The MSCI World Index marked its seventh record in eight sessions, while the dollar stabilized after a four-day decline. In Europe, the STOXX 600 rose 0.4%, and Wall Street closed at new highs following President Trump’s announcement of a 20% tariff agreement with Vietnam, significantly lower than the feared 46%.
The U.K. bond market, which had seen a sharp sell-off the previous day, partially recovered amid political uncertainty. Finance Minister Rachel Reeves’ emotional appearance in parliament prompted investor fears about fiscal discipline and potential instability in public spending plans. Gilt yields, particularly on 20-year bonds, declined 8 basis points but remained elevated, reflecting lingering doubts about the new government’s economic strategy.
Investor attention remained fixed on the upcoming U.S. payrolls data, expected to show a modest 110,000 job increase with unemployment edging up to 4.3%. Market sentiment was already shaken after a surprise drop in private payrolls, the first in over two years. Analysts warned that a weak report could spike the jobless rate to 4.4%, pressuring the Federal Reserve to cut interest rates as early as July. Futures markets currently reflect a 25% chance of a rate cut this month.
President Trump’s proposed tax and spending bill, which could add $3.3 trillion to U.S. debt over the next decade, is also a focal point for markets. Trump’s criticism of Fed Chair Jerome Powell and calls for deep interest rate cuts to 1% have heightened concerns about central bank independence. A UBS survey revealed that two-thirds of reserve managers worry Fed autonomy is at risk, with nearly half fearing a weakening rule of law could reshape their investment strategies.
Elsewhere, global bond markets remained cautious, with U.S. Treasury yields slipping slightly. Commodities saw mixed movement: Brent crude and U.S. oil prices dipped after Iran suspended cooperation with the U.N. nuclear agency, while gold also edged down. In Asia, markets were mostly positive with China’s blue-chip index rising on hopes of fresh stimulus, though Japan’s Nikkei remained flat amid tense trade negotiations with the U.S.
Source: Reuters