Updated at\u00a008.42 EDT<\/p>\n
Key events<\/p>\n
Wall Street\u2019s latest dilemma is whether to celebrate a strong economy or fear higher interest rates, says Rich McDonald, market analyst at investing and trading platform IG:<\/p>\n
double quotation markUS employers added 172,000 jobs in May, comfortably ahead of expectations, while unemployment held steady at 4.3%. Wage growth remained contained, suggesting the labour market remains healthy without reigniting inflation concerns.<\/p>\n
Ordinarily, that would be a reason for stocks to rally. Instead, investors focused on the prospect that a resilient economy could increase the need for a Federal Reserve rate hike later this year.<\/p>\n
The benchmark 10-year Treasury yield rose from 4.47% to 4.53% following the release, reflecting expectations that interest rates may move higher and for longer.<\/p>\n
Share<\/a>Wall Street falls after strong jobs reportThe Wall Street entrance to the New York Stock Exchange. Photograph: Brendan McDermid\/Reuters<\/p>\n The US stock market has opened in the red, as traders react to today\u2019s better-than-expected jobs report.<\/p>\n With hopes of interest rate cuts this year fading fast, the S&P 500 share index has dropped by 47 points, or 0.6%, in early trading to 7537 points.<\/p>\n Technology stocks are among the fallers, as concern grows that the boom in AI-related stocks may be faltering.<\/p>\n This has pulled the Nasdaq Composite index down by 301 points, or 1.13%, to 26,529 points.<\/p>\n Share<\/a>Traders fully price in Fed rate hike this year after jobs data<\/p>\n Financial traders are now fully pricing in a Federal Reserve interest-rate hike by the end of this year, after May\u2019s surprisingly strong jobs report<\/a>, according to Bloomberg.<\/p>\n That will not please president Trump, who repeatedly attacked former Fed chair Jerome Powell for not cutting rates faster.<\/p>\n Isaac Stell, investment manager at Wealth Club, thinks the markets are right, though. With strong job creation, and inflationary pressure from the Iran war, a rise in US interest rates does look more likely\u2026.<\/p>\n Stell explains:<\/p>\n double quotation markThe Fed now faces a more complex policy backdrop. Inflation has risen sharply, reaching 3.8% in April from 2.4% at the start of the year, driven in part by the continued disruption in the Strait of Hormuz. With inflation pressures building and the labour market remaining robust, the bar for rate hikes continues to fall, increasing the likelihood of further policy tightening in the near term.\u201d<\/p>\n Share<\/a><\/p>\n US government bonds are under pressure as investors conclude that early rate cuts are highly unlikely.<\/p>\n This has pushed up the yield, or interest rate, on US two-year Treasury bills to 4.147%, the highest since February 2025, Reuters reports.<\/p>\n Share<\/a><\/p>\n Such strong jobs growth will make it tricky for America\u2019s new top central banker to push for interest rate cuts. <\/p>\n Seema Shah, chief global strategist at Principal Asset Management, says Kevin Warsh may find himself considering raising interest rates later this year, despite Donald Trump\u2019s demands for lower borrowing costs:<\/p>\n double quotation mark\u201cToday\u2019s jobs report reinforces that there is little basis for an easing bias from the Fed. Job creation above 150,000 \u2013 very comfortably exceeding the Fed\u2019s estimate of breakeven and also broad-based in nature – comes alongside inflation that remains above target and is expected to trend higher in coming months. In effect, both sides of the Fed\u2019s dual mandate argue against rate cuts at this stage.<\/p>\n \u201cIf Chair Warsh pushes for cuts at his first meeting, he will be pushing against the evidence. Our base case remains that the Fed stays on hold through 2026, but if employment data continues to track around May\u2019s pace, rate hikes this year would come firmly into play.\u201d<\/p>\n Share<\/a>“This is a hawkish jobs report”<\/p>\n This strong US jobs report makes interest rate cuts less likely, explains Waleed Said, technical analyst from GivTrade:<\/p>\n double quotation markThe US NFP print is clearly hotter than expected \u2014 172k vs 85k forecast, only slightly below the previous 179k, showing the labour market is still resilient and not cooling fast enough for the Fed to relax.<\/p>\n This is a hawkish jobs report: it supports a stronger dollar, higher yields, and pushes back aggressive rate-cut expectations. Gold may come under pressure first as yields and the dollar rise, unless geopolitical fear keeps safe-haven demand alive.<\/p>\n Oil could get a short-term boost because strong jobs suggest solid economic demand, but gains may be capped if the stronger dollar and tighter Fed outlook hit risk sentiment.<\/p>\n Share<\/a>Where US jobs were created last month<\/p>\n Here\u2019s a breakdown of the sectors that hired more US workers last month:<\/p>\n Leisure and hospitality added 70,000 jobs in May, including 48,000 new roles at food services and drinking places.<\/p>\n Employment in local government rose by 55,000.<\/p>\n Health care added 35,000 jobs in May, including 26,000 in ambulatory health care.<\/p>\n Social assistance employment rose by 12,000 in May<\/p>\n Employment in mining, quarrying, and oil and gas extraction increased by 5,000<\/p>\n But\u2026<\/p>\n Financial activities employment declined by 22,000 in May and is down by 107,000 since a recent peak in May 2025. Over the month, job losses occurred in insurance carriers and related activities (-11,000) and commercial banking (-3,000).<\/p>\n Employment levels were broadly unchanged in transportation and warehousing, construction, manufacturing, wholesale trade, retail trade, information, professional and business services, and other services.<\/p>\n Share<\/a><\/p>\n The US unemployment rate held at 4.3 percent in May.<\/p>\n Share<\/a>US economy adds more jobs than expected in May<\/p>\n Newsflash: the US economy added more jobs than forecast last month.<\/p>\n Total nonfarm payroll employment increased by 172,000 in May, the US Bureau of Labor Statistics has reported, with gains in leisure and hospitality, local government, and health care.<\/p>\n Employment in financial activities declined, though, the BLS reports.<\/p>\n That\u2019s much stronger than the 85,000 new jobs which economists had predicted for May.<\/p>\n Jobs data for the previous two months has been revised higher too, the BLS adds:<\/p>\n double quotation markThe change in total nonfarm payroll employment for March was revised up by 29,000, from +185,000 to +214,000, and the change for April was revised up by 64,000, from +115,000 to +179,000.<\/p>\n Those revisions mean employment in March and April combined was 93,000 higher than previously reported \u2013 encouraging news for US workers, and the White House, but something which may make US interest rate cuts less likely\u2026<\/p>\n Share<\/a><\/p>\n Updated at\u00a008.42 EDT<\/p>\n EU’s trade deficit with China is ‘clearly unsustainable’, says \u0160ef\u010dovi\u010d The EU trade commissioner has said the growing deficit with China is unsustainable.<\/p>\n Speaking in Brussels, Maro\u0161 \u0160ef\u010dovi\u010d described the mood among commissioners who met for a China debate last Friday ahead of a leaders summit on 18 June.<\/p>\n \u0160ef\u010dovi\u010d told the Brussels and European Policy Centre conference on economy security:<\/p>\n double quotation mark\u201cI would say the underlying and common thought in everyone that the situation where we are accumulating trade deficits with China at the pace of 1 billion euros a day is clearly unsustainable\u201d<\/p>\n \u201cIt cannot be in the situation that we could have 360 billion euros deficit.\u201d<\/p>\n But \u0160ef\u010dovi\u010d said they would look at re-engaging with China.<\/p>\n double quotation mark\u201cWe also have to look how to address not only the deficit, but I would say our overall relationship with China … [regarding] global over capacities as such.<\/p>\n \u201cSo I think that what we are looking at internally is, you know, how to improve the, I would say, diplomatic outreach communications and discussions with our Chinese partners\u201d<\/p>\n \u0160ef\u010dovi\u010d also pointed out that \u201cOpenness has to be reciprocated by your partner\u201d.<\/p>\n Share<\/a><\/p>\n The contraction in the eurozone\u2019s economy in the first quarter of this year is awkward timing for the European Central Bank, which is expected to raise interest rates next week.<\/p>\n Economists predict a rate hike from the ECB, to fight inflationary pressures from the Middle East conflict.<\/p>\n Analysts at Unicredit explain:<\/p>\n double quotation markThe ECB is very likely to start hiking interest rates next week, with a 25bp increase on 11 June.<\/p>\n Several influential members of the Governing Council have already flagged the move, and the new macroeconomic forecasts will provide the background for the decision as the ECB\u2019s inflation projection moves to the 3% area for this year and towards 2.5% for next year.<\/p>\n Share<\/a><\/p>\n Despite the inflationary pressures from the Iran war, Kazakhstan\u2019s central bank has cut the country\u2019s key interest rate to 17% from 18%.<\/p>\n The National Bank of Kazakhstan eased monetary policy after its forecast for inflation this year was revised down to 9-11%, from 9.5-11.5%.<\/p>\n Share<\/a>Eurozone on brink of technical recession after Ireland’s GDP plunges<\/p>\n Newsflash: the eurozone is on the brink of a technical recession, due to a slump in activity among multinationals based in Ireland.<\/p>\n Statistics body eurostat has reported that eurozone GDP fell by 0.2% in the first quarter of this year, following a rise of 0.2% in the fourth quarter of 2025. A technical recession is two quarterly falls in GDP in a row.<\/p>\n The decline was due to a 12.1% slump in Ireland\u2019s GDP, according to official data released yesterday. However, that was caused by a 27.1% slump across Ireland\u2019s multinational-dominated sectors, as a surge of demand for pharmaceutical products during 2025 unwound.<\/p>\n Ireland\u2019s modified domestic demand (MDD), a better measure of its domestic economy rose by 0.6%.<\/p>\n Eurostat, though, uses GDP, so here we are.<\/p>\n It also reports that Denmark (+1.9%) recorded the fastest quarterly, followed by Estonia and Malta (both +1.1%). At the bottom of the growth table, Ireland were followed by Lithuania (-0.3%), Sweden (-0.2%) and France (-0.1%).<\/p>\n A chart showing eurozone GDP Photograph: Eurostat<\/p>\n Eurostat had initially estimated last month that eurozone GDP rose by 0.1% in Q1 2026, before Ireland\u2019s GDP slump hit\u2026.<\/p>\n Share<\/a><\/p>\n Updated at\u00a005.49 EDT<\/p>\n India is set to launch a new high-ethanol fuel blend in the market, its latest effort to diversify supplies and reduce the country\u2019s reliance on imported oil, Bloomberg reports.<\/p>\n Oil minister Hardeep Puri is due to introduce the fuel today at an Indian Oil<\/a> Corp.\u2019s outlet in New Delhi. It will initially sold at 50 pumps in the country.<\/p>\n The South Asian nation currently sells 20% ethanol-blended gasoline, or E20, across its retail fuel network. The new blend, called E85, will contain about 85% ethanol and pollute less than its conventional counterparts. More here<\/a>.<\/p>\n Share<\/a><\/p>\n A majority of UK firms are expecting to hike their prices to pass on the cost of higher energy, but profits are still expected to be squeezed.<\/p>\n The Bank of England\u2019s latest poll of chief financial officers at small, medium and large UK businesses has found that 57% of firms expected to increase their prices, while 68% of firms expected their profit margins to be lower.<\/p>\n![\"Lisa](\"https:\/\/www.newsbeep.com\/il\/wp-content\/uploads\/2026\/06\/1780668019_339_Lisa-OCarroll-byline-004.jpg\")
Lisa O\u2019Carroll<\/p>\n