S&P 500 Gains, Tech Sector Leads; All Eyes on April Jobs Report | Daily Market Analysis

Key events:

• USA - Average Hourly Earnings (MoM) (Apr)
• USA - Nonfarm Payrolls (Apr)
• USA - Unemployment Rate (Apr)
• USA - S&P Global Services PMI (Apr)
• USA - ISM Non-Manufacturing PMI (Apr)
• USA - ISM Non-Manufacturing Prices (Apr)

Thursday saw the S&P 500 closing on a positive note, with the tech sector leading the gains, while investors continued to analyze a multitude of corporate earnings ahead of the significant monthly jobs report scheduled for Friday.

Dow Jones Industrial Average surged by 323 points, marking a 0.9% increase, the S&P 500 advanced by 1%, and the NASDAQ Composite climbed by 1.5%.

Earlier on Thursday, data revealed that the number of Americans filing new claims for unemployment benefits remained stable at lower levels, indicating a relatively tight labor market.

All eyes are now on Friday's eagerly anticipated April jobs report, which is anticipated to reveal a likely increase of 243,000 jobs in nonfarm payrolls for April, following a rise of 303,000 in March.

This fresh labor market data comes in the wake of the Federal Reserve's decision on Wednesday to maintain interest rates at current levels during its latest policy meeting. Fed Chair Jerome Powell suggested that the next move in interest rates was still likely to be a cut.

On Thursday, Apple Inc. (NASDAQ: AAPL) released its fiscal second-quarter results, surpassing Wall Street estimates. The company's improved performance in its crucial China market, along with its announcement of its largest-ever stock buyback, drove its shares up more than 7% in after-hours trading.

For the quarter ending March 30, Apple reported earnings of $1.53 per share on revenue of $90.8 billion, exceeding analyst expectations of $1.5 EPS on revenue of $90.32 billion.

While sales in greater China, a pivotal market for Apple, declined by 8% to $16.37 billion, it was not as severe as feared, with analysts expecting revenue in China to drop to $15.25 billion amidst intensifying competition from smartphone rivals in the region.

The Australian Dollar continues its winning streak, marking the third consecutive session of gains on Friday. The hawkish sentiment surrounding the Reserve Bank of Australia is bolstering the strength of the Aussie Dollar, thereby supporting the AUD/USD pair.

As per a recent survey conducted by Reuters among economists, it is widely expected that Australia's central bank will maintain its benchmark interest rate at 4.35% during its upcoming meeting next Tuesday, marking the fourth consecutive occasion of such a decision and potentially extending this stance until the end of September. Analysts are forecasting only a single interest rate cut throughout the year, with the latest domestic inflation figures, which surpassed expectations, leading to speculation that the Reserve Bank of Australia might postpone any plans for rate reductions.

Meanwhile, the US Dollar Index continues to face downward pressure in the aftermath of cautious remarks made by Jerome Powell, the Chair of the US Federal Reserve. Powell's dismissal of the possibility of further interest rate hikes came following the Fed's recent decision to maintain the existing interest rate range of 5.25% to 5.50%.

EUR/USD continues its upward momentum for the third consecutive day on Friday, hovering around 1.0730 during the Asian trading session. The Euro, known for its sensitivity to risk sentiment, is strengthening as investors' appetite for risk stabilizes in anticipation of the upcoming US nonfarm payrolls report.

During a virtual lecture at Stanford University, European Central Bank Chief Economist Philip Lane addressed the current economic landscape, acknowledging that while inflation has decreased more rapidly than initially projected by the ECB, the transmission of policy effects has lagged behind. Lane underscored the ECB's adaptive approach, emphasizing that the bank remains flexible and data-dependent in its decision-making process.

Meanwhile, the Japanese Yen has attracted buyers for the third consecutive day, or four out of the previous five days, pushing it to nearly a three-week high against its American counterpart during the Asian trading session. Speculation surrounding Japan's financial authorities intervening for the second time this week to bolster the domestic currency has bolstered the JPY's strength.

However, the sustainability of the JPY's bullish trend remains uncertain, especially with the widening interest rate differential between the US and Japan. Moreover, a generally positive sentiment in equity markets may serve as a counterforce to the safe-haven appeal of the JPY, potentially limiting the downside for the USD/JPY pair.

Attention has now turned to the release of US employment data for April, scheduled for later on Friday. This data, including Average Hourly Earnings, nonfarm payrolls, and ISM Services PMI, is eagerly awaited as it promises to offer deeper insights into the current state of the US economy.