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MAY 5, 2023

U.S. JOB GROWTH BEATS EXPECTATIONS

U.S. employment report has indicated that job growth surpassed expectations in April, despite a slowing economy and bank turmoil. The Bureau of Labor Statistics reported that non-farm payrolls rose by 253,000, surpassing the anticipated growth of 180,000. The unemployment rate was 3.4%, below the estimated 3.6%, and tied for the lowest level since 1969. The average hourly earnings rose by 0.5%, compared to an anticipated 0.3%. In addition, professionals and businesses, healthcare, leisure, and social sectors saw higher employment rates.

REGIONAL BANKS REBOUND

Following a difficult week of losses for regional banks, PacWest Bancorp (PACW) led a rebound in U.S. regional banking stocks as its shares rose up to 26%. Western Alliance Bancorp and First Horizon Corp followed with gains of 15% and 7%, respectively. Recent events, such as the U.S. government’s seizure and sale of First Republic Bank and PacWest’s exploration of strategic options, led to significant market anxiety. As for now, some investors continue being cautious and warn that there could be more difficulties ahead, while others believe that the recent decline in stock prices has gone too far.

GOLD PRICES SURGE

Gold prices are on track for their biggest weekly gain since mid-March due to concerns about the U.S. banking sector and bets that the Federal Reserve may cut rates later this year. The reason for this is that lower interest rates benefit gold, which does not offer any interest on investment. In addition, concerns over the debt-ceiling standoff are worsening the fear of potential recession, further boosting the appeal of safe-haven investments like gold. Despite a decline in central banks’ purchases in the first quarter, the demand for gold remains high.

APPLE’S STRONG PERFORMANCE

Apple Inc. (APPL) outperformed expectations in its second-quarter earnings report by showing better-than-anticipated iPhone sales and demonstrating progress in new markets such as India. Apple’s sales for the period ending April 1 were predicted to decline by 4.4% but only decreased by 2.5% to $94.8 billion. The highlight was a 1.5% increase in iPhone sales to $51.3 billion, above estimates of a 3.3% decline. Apple also authorized $90 billion in share repurchases and dividends, with dividend increasing by 4% to 24 cents per share. Furthermore, Apple’s stock has gained a 28% year-to-date, making it a popular defensive choice for investors in the face of economic uncertainty.

INTERNATIONAL NEWS

It has been reported that the European Central Bank (ECB) plans to continue raising interest rates to bring inflation under control. French central bank governor Francois Villeroy De Galhau and his Lithuanian peer Gediminas Simkus have expressed their intention to further increase borrowing costs, even if it requires multiple hike rounds, which the financial markets are yet to be convinced of. The ECB hiked its deposit rate for the seventh consecutive time on Thursday, as it continued to raise its key deposit rate to 3.25%.

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