Global Markets React to Strong U.S. Labor Report and Geopolitical Tensions

Global equities rose as the U.S. labor market showed surprising strength, reducing expectations of significant Fed rate cuts. Meanwhile, geopolitical tensions kept oil prices high, and the dollar reached a seven-week high. Investors are focused on possible Israeli responses to Iranian actions, influencing both oil and stock markets.

MSCI's global equities index showed gains on Friday with the dollar soaring to levels not seen since mid-August. This came as a reaction to news of the U.S. labor market's unexpected strength, with 254,000 jobs added to payrolls. However, investors remained cautious amid potential Israeli strikes on Iranian energy facilities.

The U.S. Bureau of Labor Statistics reported a much higher job addition than economists anticipated, with unemployment dropping to 4.1%. This led to increased U.S. Treasury yields as hopes for a significant Federal Reserve rate cut diminished. The Fed is now expected to consider a more modest rate reduction.

Oil prices stayed elevated amid geopolitical concerns, despite President Biden suggesting Israel explore alternatives to military action against Iran. Meanwhile, the Dow Jones and other major indexes rose, reflecting a complex investor mood shaped by mixed economic and geopolitical developments.

(With inputs from agencies.)