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Global markets close Friday’s session with mixed results
(MENAFN) Global markets closed with mixed results on Friday, reflecting ongoing concerns over inflation and the potential for delayed rate cuts from the Federal Reserve. Resilient economic data from the US highlighted sustained activity, even as inflation remains a central challenge for policymakers. Market analysts suggest that recent indicators, particularly in labor and manufacturing, imply the Fed's path to reaching its 2 percent inflation target may be prolonged, influencing its approach to future rate reductions.
US labor data was a key focus, with new unemployment claims falling to 227,000 last week, below market forecasts and signaling ongoing strength in the job market. This drop fueled expectations that the Fed might hold back from making significant rate cuts in the near term. Additionally, the manufacturing sector saw modest improvement, with the Purchasing Managers' Index (PMI) for October rising slightly to 47.8, while the services PMI increased to 55.3, showing resilience in consumer services demand. Housing data added to the optimism, as new home sales climbed 4.1 percent in September to reach an annualized rate of 738,000, the highest since May 2023, suggesting strong consumer confidence.
Although inflationary pressures have cooled, Federal Reserve officials remain cautious about declaring victory. Market projections currently suggest a 25 basis point rate cut is probable next month, with a 72 percent likelihood of an additional cut in December. Financial indicators responded to these expectations, with the US 10-year Treasury yield holding at 4.20 percent, and the dollar index edging down to 104.1 following a 0.4 percent decline.
Corporate earnings brought mixed reactions: Tesla surged nearly 22 percent after projecting up to a 30 percent sales increase for next year, marking its biggest gain since 2013, while IBM missed revenue expectations, posting a 6 percent decline. Boeing faced labor challenges as employees rejected a proposed wage increase, leading to a 1.2 percent drop in shares. Political uncertainty added to market volatility, with recent polls showing a tight race between former President Donald Trump and Vice President Kamala Harris.
The market reaction was split, with the Dow Jones down 0.33 percent, while the S&P 500 and Nasdaq rose by 0.21 percent and 0.76 percent, respectively. However, early Friday futures indicated a possible downward trend, reflecting caution amid economic and political uncertainties.
US labor data was a key focus, with new unemployment claims falling to 227,000 last week, below market forecasts and signaling ongoing strength in the job market. This drop fueled expectations that the Fed might hold back from making significant rate cuts in the near term. Additionally, the manufacturing sector saw modest improvement, with the Purchasing Managers' Index (PMI) for October rising slightly to 47.8, while the services PMI increased to 55.3, showing resilience in consumer services demand. Housing data added to the optimism, as new home sales climbed 4.1 percent in September to reach an annualized rate of 738,000, the highest since May 2023, suggesting strong consumer confidence.
Although inflationary pressures have cooled, Federal Reserve officials remain cautious about declaring victory. Market projections currently suggest a 25 basis point rate cut is probable next month, with a 72 percent likelihood of an additional cut in December. Financial indicators responded to these expectations, with the US 10-year Treasury yield holding at 4.20 percent, and the dollar index edging down to 104.1 following a 0.4 percent decline.
Corporate earnings brought mixed reactions: Tesla surged nearly 22 percent after projecting up to a 30 percent sales increase for next year, marking its biggest gain since 2013, while IBM missed revenue expectations, posting a 6 percent decline. Boeing faced labor challenges as employees rejected a proposed wage increase, leading to a 1.2 percent drop in shares. Political uncertainty added to market volatility, with recent polls showing a tight race between former President Donald Trump and Vice President Kamala Harris.
The market reaction was split, with the Dow Jones down 0.33 percent, while the S&P 500 and Nasdaq rose by 0.21 percent and 0.76 percent, respectively. However, early Friday futures indicated a possible downward trend, reflecting caution amid economic and political uncertainties.
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