The U.S. labor market has continued to improve in recent weeks, Bloomberg reported Friday, as the jobless rate has declined to 5 percent – which many analysts consider to be near full employment.
Advertisement
Federal Reserve Chairman Janet Yellen said Friday that an interest rate increase would be appropriate in the coming months if the economy keeps improving.
Hopes of a rate hike boosted financial companies, while a rise in oil prices pushed energy stocks higher.
In December, when the Fed hiked rates for the first time in nine years, banks wasted no time in increasing interest rates on credit cards and loans.
US markets are also closed for Memorial Day. If U.S. payrolls due on Friday show solid job growth and if Yellen signals a rate hike in her speech on the following Monday, the dollar could break above the previous April peaks close to 112 yen, said Koichi Takamatsu, manager of forex at Nomura Securities.
US gold was down 0.7 percent at $1,205.50.
Earlier Thursday, St. Louis Fed President James Bullard said markets “read the minutes correctly” when they priced a higher chance of a hike.
“The return to United States rate hike expectations have reopened the possibility of short-term outperformance for European stocks”, said Didier Duret, global chief investment officer at ABN-AMRO Private Banking, adding investors were keeping an eye on the dollar for it to break recent ranges.
Speaking at Harvard University, Yellen said she believed U.S. economic growth and the labor market would continue to strengthen after the first-quarter slowdown, and that the Fed’s early-2016 worries over the global economy and market volatility had diminished.
Given Yellen’s remarks, together with comments by other senior Fed officials, many market participants have come to believe that the USA central bank, which resumed tightening in December a year ago, will conduct a second rate hike as early as June or July, market sources said.
For the week, the S&P 500 rose 2.3 per cent and the Dow added 2.1 per cent, the best weekly performance for both since March.
The dollar index, which measures the greenback against a basket of six major currencies, was last almost unchanged at 95.564, down from a two-month high of 95.968 hit on Friday.
This week will provide investors with clues as to how far the Fed is from its next interest rate hike and whether the European Central Bank will see out the year without easing its monetary policy again.
Brent crude was last up to US$49.72 a barrel, after climbing above US$50 for the first time in six months last week.
Advertisement
S&P 500 e-minis were up 0.5 points, or 0.02 percent, with 185,067 contracts traded.
