Global equities edged higher on Thursday as investors grew more confident that a U.S. interest rate cut will help support economic growth. Fresh labor market data showing slower employment added to expectations of easing, while the U.S. dollar weakened and moved toward its tenth consecutive daily decline against major currencies.
In early U.S. trading, stocks began to lose momentum after two days of gains. The S&P 500 traded flat, with healthcare, consumer discretionary and materials stocks leading losses. Meanwhile, real estate, financials and utilities sectors were among the strongest performers.
The Dow Jones Industrial Average slipped 0.09%, the S&P 500 eased 0.06% and the Nasdaq Composite declined 0.14%.
Across Europe, the STOXX 600 rose 0.42% and remained on track for a modest weekly gain. London’s FTSE 100 was up 0.16%, and Germany’s DAX gained 0.45%. MSCI’s global equity index climbed 0.18%.
Japanese markets saw a sharp rally after a government bond auction drew strong demand, improving sentiment across the country’s financial markets. The Nikkei jumped 2.33%.
Michael Farr, CEO of the advisory firm Farr, Miller & Washington, noted that after a 5% pullback in late November, U.S. stocks have fully rebounded and are now trading near record highs.
U.S. private payrolls show sharp decline
The uptick in equities followed a significant drop in U.S. private payrolls — the largest in more than two and a half years — along with services sector data showing steady activity but slower hiring in November.
Farr added that markets may struggle with the Federal Reserve’s messaging next week:
“If they cut by a quarter-point and pause, markets might be disappointed. If they don’t cut and say they’ll wait until the next meeting, markets will be disappointed there too.”
Fed funds futures now assign nearly a 90% probability of a 25-basis-point rate cut at the December 10 meeting, up from around 83% one week ago, according to CME’s FedWatch tool.
The U.S. dollar index slipped 0.08%, putting it on track for its tenth straight daily loss — its longest losing streak since records began in 1971, according to LSEG data.
Bond yields rise as political uncertainty grows
The yield on the U.S. 10-year Treasury climbed 3.4 basis points to 4.092%. The Financial Times reported that bond investors have warned the U.S. Treasury about Kevin Hassett — considered a possible replacement for Jerome Powell — fearing he could push for aggressive rate cuts favored by President Donald Trump.
Farr suggested that the timing of the administration’s decision may be intentional:
“It may be seen, rightly or wrongly, as signaling a more dovish stance around this meeting.”
In Japan, demand for government debt was the strongest in more than six years, easing worries about long-term fiscal pressures. The yen strengthened, with the dollar falling 0.28% to 154.8 yen, putting the currency on track for its best weekly performance against the dollar in over two months.
The yen was further supported by a Reuters report stating that the Bank of Japan is likely to raise interest rates in December with government approval.
Meanwhile, the offshore yuan weakened slightly, pushing the dollar up 0.18% to 7.070 yuan, after the Chinese currency reached its strongest level against the dollar in more than a year on Wednesday.
Precious metals cooled after a strong rally. Gold slipped 0.28% to $4,195 an ounce, while silver dropped 2.4% to $57.03 an ounce after reaching a record high earlier in the week. Brent crude rose 0.06% to $62.71 per barrel.
