The S&P 500 seems to have established a minor support at 5,100, but it too may remain in a consolidation range as this was a week where good news was bad news for the market, and bad new was also bad news for the market. The US jobs report came in more robust than expected. For March, total nonfarm payroll employment rose by 303,000, and the unemployment rate stayed little changed at 3.8% according to the US Bureau of Labour Statistics.
While good for the economy, the jobs report wasn’t good for the outlook for the Federal Funds Rate and the risk-free rate as measured by the yield on the 10-year US treasuries. It remained elevated at 4.53%.
Inflation remained stubbornly high. Inflation rose by a strong-than-expected 3.5% y-o-y in March, an an uptick from the 3.2% y-o-y rise in February. This, coupled with March's strong employment report, suggests the path to the Fed's 2% inflation target could take longer than expected, JP Morgan has said.
While the US economy is running hotter than expected, the Chinese economy cooled further. Its March trade figures were mundane. Merchandise exports posted a 7.5% y-o-y decline in translating into a 2.1% y-o-y rise in exports in 1Q2024. Imports shrank -1.9% y-o-y in March, translating into a 1.8% y-o-y rise in 1Q2024.
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The bellwether for Chinese stocks on SGX, the Lion-OCBC Securities China Leaders ETF which reflects the movement of the Hong Kong Stock Connect 80 Index, fell back towards the breakout level of $1.42. A break below this level will imply the breakout has failed.
