European and Asian stock markets gained on Monday, fueling fresh expectations that the US Federal Reserve could slash interest rates this year.
Stock markets in Hong Kong and Shanghai closed, while Paris and Frankfurt rose at lunchtime in holiday-thinned trade.
London and Tokyo were closed.
Investors cheered statistics on Friday showing that US job growth slowed in April, bolstering expectations that the Fed would decrease interest rates in September.
“The Fed will not be able to cut interest rates immediately, but it has a better chance of doing so sooner than expected at the beginning of last week,” said Swissquote bank analyst Ipek Ozkardeskaya.
She assessed the chances of a September reduction at 67%.
However, she emphasised that the timing “would be a politically uncomfortable time for the Fed” since it would occur before the November presidential election.
“No-one at the Fed wants to be pointed at for manipulating the (election) results,” she went on to say.
Investors have also raised their expectations for how many rate cuts will occur, albeit the two priced in are still well short of the six anticipated at the beginning of the year.
The Fed had previously been expected to begin decreasing interest rates in June as inflation moderated, but an increase in consumer price increases and solid US economic statistics altered expectations.
Last week, the central bank maintained rates at a 23-year high, citing a “lack of further progress” in bringing inflation down to its two-percent objective.
Fed Chairman Jerome Powell, on the other hand, reassured investors that, while the central bank was willing to keep interest rates unchanged for as long as necessary, the next step would be unlikely to be a raise.
Hopes for a September decrease increased when the non-farm payroll data on Friday revealed that the US economy added 175,000 jobs in April, down from 315,000 in March, and wage growth was also weaker than expected.
“The softer wage growth and slight increase in unemployment may alleviate some of the Federal Reserve’s concerns about implementing rate cuts this summer,” said Stephen Innes of SPI Asset Management.
“The unexpected weakness across the key labour series is a much-needed friendly surprise for policymakers.”
The data boosted Wall Street on Friday, as London set another record.
Shanghai was the star performer on Monday, as mainland Chinese investors returned from a long holiday to catch up on a worldwide rise that had occurred over the previous few days.
Traders also praised a report last week that policymakers will consider methods to bolster China’s devastated property industry, as well as steps to give more economic support.