Daily Market Commentary 5th June 2023

All the stars appeared to have aligned on market trade Friday. US Non-Farm Payrolls surged and added 339,000 jobs, while the headline unemployment rate rose from 3.5% to 3.7%! This was good news from the economic perspective, with a healthy jobs market, while the headline rate calmed fears of further interest rate rises. It could be looked at from the opposite perspective, that the tight labour market will force the Fed to raise rates once again, but the bulls were not to be denied. US equity markets surged, as market sentiment returned with gusto. US Bond Yields also crept higher, as did the US Dollar. The EUR slipped back to 1.0700, while the GBP fell back to 1.2440. The coming week will focus on trade and growth in Europe and the USA.

The resurgent reserve tamed the commodity currency rebound, with the AUD holding 0.6600, while the NZD slipped to 0.6060. Local markets will focus on the RBA rate decision, due Tuesday, with no rate change expected. Inflation appears to be on the decline in Europe, with dramatic falls in the last week, but closer analysis is a reality check. The inflation numbers are measuring the subsidised energy prices, following the massive surge in prices in the early part of 2022 (which fall out of the annual CPI numbers measures), following the opening of the Ukraine military operations.