World Markets Surge on US Wage Growth Slowdown

World stock markets rose on Monday, following the rally on Wall Street last week due to investors’ hopes for slowing U.S. wage gains to keep inflation at bay. This does not concern policymakers in the Federal Reserve who had already hiked up interest rates. In Europe, Germany’s DAX and CAC 40 in Paris obtained small gains, while Britain’s FTSE 100 dipped slightly.

Asian markets had large gains, with Chinese tech stocks boasting the largest gains. China’s Central Bank’s Deputy Chief, Guo Shuqing, said the government’s two-year crackdown on internet companies is coming to an end, and government policy will now focus on helping such companies create jobs and compete in the global market. The news bolstered tech stocks such as Alibaba’s Hit Kong-traded shares and Tencent’s shares, which rose 8.7% and 3.6% respectively. The news was also a boost to the Hong Kong Hang Seng index and the Shanghai Composite Index, which closed 1.9% and 0.6% higher respectively. South Korea’s Kospi, Taiwan’s benchmark, and Bangkok’s SET index closed with gains as well.

The U.S. jobs report late last Friday revealed slowing wage gains, easing down inflation, though there was still possibility of a recession and eventually dragging down prices of investments. The index of S&P 500 gained 2.3%, the Dow Jones Industrial Average 2.1%, and Nasdaq composite 2.6%, while benchmark crude oil gained 10 cents per barrel.

The Federal Reserve is hoping for a softer landing, with indications of cooling wage inflation, which could boost calls for a somewhat optimistic outcome for equities. Companies will be reporting their profits for the last quarter of 2022 in the coming weeks, which could signify a downturn if S&P 500’s profit per share drops.

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