Markets breathe easier as US jobs market cools and rate fears recede

US jobs growth undershoots expectations, with just 29,000 jobs added in September versus forecasts of around 90,000.
Wage pressures are cooling, with annual earnings growth slowing to 3%, its lowest level since the pandemic.
Bond yields have eased and equities are rising, with the S&P 500 higher in early trade, as investors scale back fears of an aggressive Fed hiking cycle.
Energy prices remain the wild card, with oil close to $100 a barrel keeping inflation concerns simmering.
Markets set to remain twitchy, with the outlook heavily dependent on whether a lasting resolution can be found to the Iran conflict.
Susannah Streeter, Chief Investment Strategist, Wealth Club.
‘’There’s been a ripple of relief on financial markets as hopes rise that the Fed won’t have to go so hard and fast in raising interest rates. Treasury and gilt yields have eased off, and equity markets are on a rising tide, as the rush of worry has started to recede.
The latest US jobs figures came in weaker than expected, with just 29,000 jobs added in September, compared with forecasts of around 90,000. That’s a marked slowdown, although some of the weakness reflects a fall in government payrolls. But pay packets indicate that employees don’t have the upper hand in demanding higher wages, with hourly earnings rising by just 0.1% over the month, taking annual wage growth down to 3%, its lowest rate since the pandemic.
The figures suggest the jobs engine is losing a little steam, but isn’t spluttering to a halt, so the snapshot has been greeted as a dose of better news and a sign that the Fed may be a tad more wary about hiking borrowing costs. Rather than a rapid succession of rate rises, chances are increasing for a more measured path ahead, closer to the prospect of two further increases.
This has eased the jolt of deep unease which had hit bond markets this week over the prospects of inflation bedding in and prompting a rapid hiking cycle. The S&P 500 has risen in early trade, and the FTSE 100 has hung onto positive territory. But given that energy prices remain elevated, with Brent Crude close to $100 a barrel, there is still a huge amount of uncertainty around, and investors are set to stay twitchy until a long-term resolution to the Iran conflict can be agreed.’’