London, United Kingdom — Stock markets mostly rose while gold reached new highs on Tuesday, with expectations of US rate cuts to bolster the world’s biggest economy offsetting political turbulence in Japan and France.
A steep downward revision to US job creation cemented expectations that the Federal Reserve would begin lowering its benchmark rate next week in a bid to boost growth.
US employment growth is likely to be revised down by 911,000 for the 12 months ending in March, official data showed.
After last month’s big miss on US jobs creation, “these revisions suggest that jobs momentum is being lost from an even weaker position than originally thought,” said analysts at ING.
Investors are now looking to consumer inflation data coming Thursday, since a hot reading could keep the Fed from cutting further as it looks to curb price increases.
US stock indices were little changed but remained near record highs reached in recent weeks, with the tech-heavy Nasdaq closing at a record on Monday.
In Asia, Tokyo’s Nikkei briefly spiked to a new record before ending lower amid hopes that whoever replaces Shigeru Ishiba as prime minister will unveil a fresh round of economic stimulus.
Japan’s ruling Liberal Democratic Party will pick its new leader on October 4 to replace Ishiba, who resigned at the weekend after huge election setbacks.
In Paris, the CAC 40 index moved higher after French Prime Minister Francois Bayrou submitted his resignation to President Emmanuel Macron in the wake of his government’s ousting.
Bayrou on Monday suffered a crushing loss in a confidence vote he called in parliament, seeking support for more than 40 billion euros ($47 billion) in budget cuts to rein in France’s debt.
France’s borrowing costs briefly exceeded those of traditional European debt-laggard Italy on Tuesday, ahead of an update on the country’s credit rating from Fitch on Friday.
However, “for now, the market impact seems limited”, said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
Holger Schmieding, chief economist at Berenberg Bank, agreed that “a genuine financial crisis with a self-reinforcing doom loop (higher yields = bigger deficits = even higher yields…) remains quite unlikely for the time being”.
Gold, an investment haven in uncertain times, extended its record run, hitting an all-time high of over $3,680 an ounce.
Mining merger
On the corporate front, British mining group Anglo American and its Canadian peer Teck Resources announced plans for a multi-billion-dollar merger, creating a behemoth of copper production and of other critical minerals.
Anglo American shares ended nine percent higher in London, while Teck’s stock was up 14 percent on the New York Stock Exchange. Shares in rival miners jumped on their coattails.
Indonesian stocks and the rupiah tumbled after President Prabowo Subianto removed Finance Minister Sri Mulyani Indrawati in a cabinet reshuffle following fatal anti-government protests across the country.
