The US labor market is showing signs of cooling. Oil is growing amid rumors of further production cuts

The latest US jobs report (NFP) showed that 187k new jobs were created in August, slightly above market expectations of 170k. However, the unemployment rate rose to 3.8% in August from 3.5%, and wage pressures eased slightly. The labor market data released on Friday showed clear signs of a cooling labor market. The data will likely prevent the Fed from hiking rates in September, keeping hopes alive that the US economy can avoid a recession.

Friday’s Fed comments were negative for stocks. Atlanta Fed President Bostic said that the US economy is going through a period of some disruption as debt refinancing is taking place at much higher interest rates, putting some pressure on both financial institutions and the government. In addition, FRB Cleveland President Mester said US inflation remains “too high” despite recent improvements, and the labor market remains strong.

ECB Governing Council representative Villeroy said on Friday that the ECB is close to peaking interest rates, with keeping rates high for quite some time being more important. ECB president Lagarde is expected to speak today. The latest economic data showed that the Eurozone manufacturing PMI for August was revised down by 0.2 to 43.5 from the originally published reading of 43.7.

Oil prices rose to their highest level in more than seven months on Friday, breaking a two-week losing streak amid concerns about tightening supply. For the week, the price of Brent crude rose about 5%, the biggest weekly gain since late July. WTI crude futures rose 7%, the biggest weekly gain since March. Saudi Arabia is expected to extend a voluntary oil production cut of 1 million barrels a day through October, extending a supply curb designed by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, to support prices.

Asian markets were mostly up last week. Japan’s Nikkei 225 (JP225) gained 2.49% for the week, China’s FTSE China A50 (CHA50) rose by 1.71%, Hong Kong’s Hang Seng (HK50) ended the week down by 0.74%, and Australia’s S&P/ASX 200 (AU200) ended the week positive by 2.29%.

Australia’s Central Bank is set to keep interest rates unchanged at Governor Philip Lowe’s final meeting amid growing signs that his rate-tightening campaign is slowing inflation. The latest inflation data came in better than expected at 4.9% compared to a peak of 8.4% in December 2022, suggesting the RBA may stay on hold for now.

New Zealand’s main opposition National Party has attempted to topple the Labor government, promising to reduce inflation and stimulate the economy if it wins the October election. National leader Christopher Luxon made the pledge when the party officially launched its election campaign Sunday in Auckland. The election comes amid a cost-of-living crisis and a weak economy. Although the country’s inflation rate is falling, it is still at 6%, and mortgage rates have soared. The economy entered a moderate recession late last year and is projected to face a deeper recession this year as households cut back on spending.