LONDON, May 2 – On Friday, global equities surged while U.S. Treasuries lost appeal, driven by renewed hopes for improved U.S-China trade relations and stronger-than-expected job figures that eased concerns about the economic impact of American tariffs.
MSCI’s world share index climbed 0.6%, returning to levels last seen before a steep decline triggered by U.S. President Donald Trump’s announcement of tariffs during last month’s Liberation Day.
Strong U.S. Jobs Report Fuels Market Optimism
The latest U.S. payrolls report offered a much-needed shot of confidence to investors, showing employers added 177,000 jobs in the past month. This figure came in well above projections, which had forecast a slowdown in hiring to around 130,000. In addition to the rise in employment, the unemployment rate stayed fixed at 4.2%, supporting the view that the U.S. economy remains on a stable path despite uncertainties around the world.
The positive jobs report gave a notable boost to U.S. markets. The S&P 500 rose 1%, while the tech-heavy Nasdaq added 0.9% during early trading. Investors interpreted the data as a sign of resilience in the domestic labor market, even if broader economic concerns continue to loom.
Jason Da Silva, Director of Global Investment Strategy at Arbuthnot Latham, remarked that while economic data is encouraging, “the real variable to monitor is the ongoing situation with tariffs.” Market participants widely share the view that trade policy developments will steer investor sentiment more than any single jobs report.
Rising optimism about the economy led investors to shift away from government bonds, causing the yield on the 10-year U.S. Treasury to climb by 4 basis points to 4.27%. The move reflected reduced demand for safer assets as investors embraced a risk-on mood following the labor market news.
Trade Developments Between U.S. and China Signal Hope
Market sentiment was already trending positive before the release of employment data, thanks to emerging signs of renewed dialogue between the United States and China on trade issues. According to statements from Chinese officials, the U.S. has expressed interest in finding common ground, and Beijing has affirmed that its doors remain open to negotiations.
These statements eased fears of escalating trade barriers, which have weighed heavily on investor confidence in recent months. Although it remains unclear what specific measures the White House intends to take, the fact that both sides appear willing to talk has tempered immediate concerns.
Still, corporate America remains wary. Recent earnings calls have underscored the uncertainty tied to possible tariff increases. For instance, Apple reduced its share buyback program, cautioning that tariffs could impact its bottom line by up to $900 million this quarter. Similarly, General Motors warned that tariffs might slash earnings by as much as $5 billion, and American Airlines has retracted its previous profit forecast, citing rising operational costs.
Bryon Anderson, Head of Fixed Income at Laffler Tengler Investments, said, “What the administration has set in motion may have ripple effects in the months to come, even with markets showing gains today.” This wary perspective highlights ongoing worries about the economy’s long-term stability, despite the current wave of investor optimism.
European equities followed the positive momentum from Wall Street, with the STOXX index climbing 1.6%, Germany’s DAX jumping 2.4%, and the FTSE 100 in London advancing by 1%. Market participants throughout Europe drew confidence from the robust U.S. employment data and encouraging signs that trade tensions between the U.S. and China could ease.
Meanwhile, the MSCI index tracking Asia-Pacific equities outside Japan reached its highest point since late March, buoyed by the same themes. This broad rally came even as recent data showed some economic softness: the U.S. economy contracted slightly in the first quarter for the first time in three years, and Chinese manufacturing output slowed to a 16-month low in April.
Despite this, the overall market tone remained upbeat. The U.S. dollar regained some ground following the jobs report, though it remained down about 1% on the day, trading at 143.8 yen. The euro ticked up 0.3% to $1.1327, and the British pound maintained its recent rally, gaining 0.2% to trade at $1.3298.
Commodity markets offered a more subdued picture. Oil prices dipped after indications emerged that Saudi Arabia may not support further output cuts. Officials reportedly told allies that they could endure an extended period of low prices without additional production curbs. Brent crude dropped by 39 cents to $61.14 per barrel, while U.S. West Texas Intermediate crude fell 43 cents to $58.18.
In contrast, gold prices nudged higher, with spot gold increasing by 0.2% to reach $3,244 an ounce, reflecting a mild safe-haven appeal even amid broader risk appetite.
In summary, Friday’s market performance was powered by two key forces: The resilience of the U.S job market and early indications of improvement in China-U.S trade dynamics. While major risks remain on the horizon, for now, investors appear to be embracing a more hopeful narrative, leaving behind the caution that has dominated markets in recent weeks.