US markets ended the week on a high note, with a strong jobs report driving optimism among investors. A larger-than-expected increase in nonfarm payrolls provided reassurance about the resilience of the US economy, fuelling a broad market rally. Major indices, including the Dow, S&P 500, and Nasdaq, all posted solid gains, reversing earlier losses from the week. Investors were encouraged by the robust labour market data, which suggested that economic growth remains steady despite recent geopolitical tensions and concerns over inflation. Tech stocks and financials led the charge, while oil prices also surged due to escalating conflict in the Middle East, adding further momentum to the rally. 

Key Takeaways:

  • Dow Closes at Record High: The Dow Jones Industrial Average surged 341.16 points, or 0.81%, to close at an all-time high of 42,352.75. The rally came on the back of a strong US jobs report, which exceeded expectations and provided a boost to investor confidence. This marked a significant turnaround from earlier in the week, when geopolitical tensions had weighed on markets.
  • S&P 500 Gains 0.9%: The S&P 500 climbed 0.9% to 5,751.07, driven by strong performances in the financial sector, which rose 1.6%. Major banks like JPMorgan Chase and Wells Fargo saw gains of more than 3%, contributing to the index’s rise. Friday’s gain erased earlier losses from the week, as investor optimism returned after solid jobs data.
  • Nasdaq Composite Rises 1.22%: The tech-heavy Nasdaq Composite surged 1.22%, closing at 18,137.85. Major tech stocks, including Tesla, Amazon, and Netflix, helped propel the index higher, with tech being one of the strongest performing sectors on the day. Friday’s gains helped the Nasdaq finish the week up 0.1%, despite being down over 1% heading into the session.
  • Nonfarm Payrolls Beat Expectations: US nonfarm payrolls increased by 254,000 in September, significantly above the forecast of 150,000. This marks a major recovery from the slower pace of job growth seen over the summer. The unemployment rate dropped to 4.1%, defying expectations that it would remain at 4.2%. The strong labour market data suggested that the economy is more resilient than previously thought.
  • European Markets Rise After US Jobs Report: European markets closed higher on Friday, lifted by positive sentiment from the US labour market data. Germany’s DAX gained 106 points, or 0.55%, while France’s CAC 40 rose by 69 points, or 0.92%. Banks led the gains in Europe, with the sector climbing 1.7%. Automakers also benefited from the European Union’s decision to impose tariffs on China-made battery electric vehicles (BEVs), with automaker shares up 1.5%. Meanwhile, Maersk saw a significant drop of over 5% after US dockworkers reached a deal to end a three-day strike, alleviating some pressure on global shipping. The FTSE 100 Index was down 40.13 points or 0.48% last week.
  • Asian Markets See Mixed Results Amid Oil Gains: Asian markets were mixed on Friday as investors balanced strong US jobs data with ongoing geopolitical concerns in the Middle East. Hong Kong’s Hang Seng index resumed its rally, gaining over 2%, while Japan’s Nikkei 225 rose 0.22% to close at 38,635.62 points. South Korea’s Kospi added 0.31%, closing at 2,569.71, and the broader Kosdaq rose 0.9% to 768.98. However, Australia’s S&P/ASX 200 fell 0.67% to 8,150 points, pressured by global uncertainties. In the shipping sector, Japan’s Nippon Yusen and Kawasaki Kisen dropped sharply, by 9.48% and 9.65%, as a tentative agreement between US dockworkers and maritime unions eased supply chain pressures.
  • Crude Oil Posts Best Weekly Gain in Over a Year: US crude oil prices surged 9.09% this week, the largest weekly gain since March 2023, closing at $74.63 per barrel. Brent crude also posted a strong 8.43% gain, finishing at $78.23 per barrel. The rally in oil prices was driven by escalating tensions in the Middle East, with concerns that the conflict could disrupt oil supplies, particularly after Iran launched missile strikes on Israel.
  • Treasury Yields Jump: US Treasury yields rose sharply on Friday following the stronger-than-expected jobs report. The 10-year Treasury yield increased by 12 basis points to 3.971%, while the 2-year yield climbed 21 basis points to 3.924%. The strong labour market data reinforced expectations that the Federal Reserve may proceed with smaller interest rate reductions in the coming months.

FX Today:

  • GBP/USD Nears Key Support Levels: GBP/USD was trading around 1.3127, slightly pulling back after reaching a high of 1.3131 earlier on Friday. The pair remains above the critical 200-period SMA at 1.3200, which continues to offer substantial support. The retreat signals potential profit-taking by buyers who had driven the pair toward recent peaks. Resistance levels to watch are at 1.3306 (50-period SMA), followed by 1.3330 and 1.3400. If GBP/USD dips below 1.3200, the next support level to monitor is 1.3100, with further downside targets near the September lows at 1.3000.
  • EUR/USD Bounces Off Support Amid Volatility: EUR/USD traded near 1.0976 after rebounding from earlier lows. The pair has been under pressure throughout the week, bringing it close to the 200-period SMA at 1.1107, which acts as a key support level. Despite the recent bearish trend, EUR/USD remains above the psychological level of 1.0900, which is providing near-term support. Immediate resistance lies at 1.1108 (50-period SMA), with a break above this level potentially targeting 1.1150. Failure to hold support at 1.0900 could lead to a deeper pullback toward 1.0800.
  • AUD/USD Faces Selling Pressure Amid Uncertainty: AUD/USD is trading around 0.6800, slightly above the 200-period SMA at 0.6780, which has been acting as a key support level. The pair has recently experienced selling pressure after a strong rally, suggesting profit-taking by bulls. Immediate resistance is seen at 0.6880 (50-period SMA), with a potential upside target at 0.6900. However, a break below 0.6780 could shift momentum in favour of the bears, with 0.6700 as the next major support level.
  • Gold Holds Above Key Support Levels Amid Bullish Momentum: Gold prices was settling  around $2,651.70, maintaining a bullish stance after a series of gains in recent weeks. The metal is supported by the 50-period SMA, currently at $2,656.10, which remains a critical level to watch. Gold’s rally has been driven by inflation concerns and global economic uncertainty, pushing it closer to its all-time highs. Immediate resistance is at $2,675, and a break above this level could see gold aiming for $2,700. On the downside, the 100-period SMA at $2,621.76 provides key support, followed by the 200-period SMA at $2,564.15.
  • USD/JPY Soars Above 148.00: USD/JPY surged to 148.73, climbing over 1% after a stronger-than-expected US jobs report boosted Treasury yields. If the pair clears resistance at 150.00, it could target the 200-day moving average (DMA) at 151.06, followed by the 100-DMA at 151.94. On the downside, immediate support is at 148.00, with further support at 147.78 and the lower boundary at 146.90-147.00.

Market Movers:

  • Ubisoft Soars on Buyout Rumours: Ubisoft Entertainment skyrocketed 30.7% after a Bloomberg report suggested that Tencent and the Guillemot family, both minority shareholders in the French video game publisher, are considering a potential buyout. The speculation sent shares sharply higher as investors anticipated a deal.
  • Abercrombie & Fitch Jumps on Positive Catalyst Watch: Shares of teen apparel retailer Abercrombie & Fitch soared 9.1% after JPMorgan added the stock to its positive catalyst watch list. 
  • Spirit Airlines Plummets as Bankruptcy Fears Loom: Spirit Airlines plunged 24.5% following a report that the ultra-low-cost carrier is potentially filing for bankruptcy. The failed merger with JetBlue Airways, which saw a 15% gain in its stock, has left Spirit in a precarious financial position, causing a massive sell-off as investor concerns intensified.
  • Rivian Slips on Production Cut: Rivian Automotive dropped 3.1% after the electric vehicle maker slashed its annual production guidance for 2024 to between 47,000 and 49,000 vehicles, down from the previously forecasted 57,000. The company cited supply shortages as the key factor in reducing its outlook.
  • Vistra Corp Extends Rally: Utility giant Vistra Corp continued its winning streak, with shares rising 4.5%. Vistra, which recently overtook Nvidia as the S&P 500’s top gainer for the year, has seen its stock climb in 18 of the last 19 trading sessions, driven by solid operational performance and favourable market conditions.
  • SilverCrest Metals Pops on Acquisition News: SilverCrest Metals surged nearly 9% after announcing that Coeur Mining will acquire the company in a deal valued at approximately $1.7 billion. Despite the rally in SilverCrest shares, Coeur Mining dropped 7% on the news, as investors reacted cautiously to the acquisition’s potential costs.
  • Zim Integrated Shipping Services Tanks as Strike Ends: Zim Integrated Shipping Services saw its stock plunge 12.6% after US dockworkers and the United States Maritime Alliance reached a tentative deal to end their three-day strike. 
  • Summit Therapeutics Gains on FDA Fast-Track Approval: Shares of Summit Therapeutics increased 2.6% after the US Food and Drug Administration granted fast-track designation to its cancer drug, ivonescimab. The designation accelerates the drug’s approval process, boosting investor confidence in Summit’s future growth prospects.

As the week draws to a close, US markets surged on the back of a surprisingly strong jobs report, with the Dow reaching a record high and both the S&P 500 and Nasdaq posting significant gains. The robust labour market data eased concerns over economic slowdown, boosting investor confidence across sectors. European markets also reacted positively to the news, with banks and automakers leading the charge, while oil prices posted their biggest weekly gain in over a year amid Middle East tensions. However, Asian markets remained mixed as geopolitical risks continued to weigh on sentiment. With investors closely watching developments in both the labour market and the global political landscape, market volatility is expected to persist in the coming weeks.