The bull market in financial markets seems to be accelerating with ... negative data from the US labor market. The scale of the readings' mismatch with expectations was the largest since July 2020, yet stock market indices set new records and industrial metals prices shot up.
Since the great financial crisis more than a decade ago, investors and markets have come to live in a time of absurdity and are paradoxically happy that things are not going well in the economy, which means that interest rates will stay low for longer and the asset purchase program will not change. Markets look as if they want to "chase the rabbit" all the time, but they don't want to catch it, because when they do, there will be nothing left to chase. Currently, all markets are literally swelling. Food, industrial metals, commodities, stocks, cryptocurrencies - all in hopes of further stimulation of the economy, and once the economy improves, investors may be greatly disappointed. Hence, the 266,000 gain in new U.S. jobs, rather than the roughly 1 million, pleased everyone.
The S&P 500 index and the Dow Jones Industrial Average set new all-time highs, and President Joe Biden himself said after the labour market data that the US economy is not in danger of overheating, referring to earlier words of Treasury Secretary Janet Yellen, who spoke in a different tone for a while. The specter of a rate hike in the U.S. has receded into 2023, and inflation expectations have soared to levels last seen in 2006. This, along with a weaker dollar, may have helped markets such as gold and silver, which have clearly begun to rise in price. An ounce of gold currently costs $1,836 and is the most expensive since early February. Perhaps, last week led to the end of the correction in gold prices that has been going on since August 2020.
Powerful increases are also observed on the cryptocurrency market. Ether, the second among cryptocurrencies after bitcoin, has overcome the level of USD 4 thousand. After less than 10 days of May, the scale of growth seems to be bigger than in any full month in the history of this market. The attention of speculators in the cryptocurrency market may also be attracted by the situation of litecoin, which in turn was able to overcome the resistance located in the area of USD 360 and found itself at the highest level in its history.
The bull market in global markets seems to be growing with increasing simulation programs in the U.S., but also globally, and the prospect of a continuation of the low interest rate policy.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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