US stock futures climbed and gold prices surged on Friday after the latest employment report showed the US economy unexpectedly lost jobs in July, strengthening expectations that the Federal Reserve may keep interest rates unchanged in the coming months.
According to the latest labour market data, the US economy shed 23,000 jobs in July, marking an unexpected contraction and signalling further cooling in employment conditions. Economists had largely expected payroll growth during the month.
Despite the decline in employment, the unemployment rate edged down to 4.1% from 4.2%. The improvement, however, was driven by a sharp fall in labour force participation, which dropped to its lowest level in more than five years, indicating fewer people were actively seeking work.
The weaker-than-expected jobs report prompted investors to dial back expectations of further monetary tightening by the Federal Reserve, boosting sentiment across equity and precious metals markets.
Nasdaq 100 futures led the gains, rising 0.8%, while S&P 500 futures advanced 0.4%. Dow Jones Industrial Average futures were up around 110 points, or 0.2%, as traders positioned for a potentially more accommodative interest rate outlook. The moves came after a weak session on Wall Street on Thursday, when higher oil prices weighed on investor sentiment. The Dow Jones Industrial Average dropped more than 460 points, or 0.9%, snapping a five-session winning streak. The S&P 500 slipped 0.2%, while the Nasdaq Composite ended 0.1% lower.
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Gold prices rallied sharply as investors sought safe-haven assets amid changing interest rate expectations. Spot gold jumped 2.8% to $4,360.17 an ounce, supported by expectations that lower borrowing costs could weaken the US dollar and enhance the appeal of non-yielding assets such as bullion.
Crude oil prices, meanwhile, eased after recent gains. West Texas Intermediate (WTI) crude for September delivery fell 0.6% to $76.85 per barrel, while Brent crude declined 0.7% to $81.90 a barrel.
Despite Thursday's decline, US equities remain on track for a second consecutive week of gains. The Nasdaq is poised for its strongest weekly performance since May, supported by renewed buying in semiconductor and technology stocks after recent weakness.
Investor sentiment has also improved this week on hopes that geopolitical tensions in the Middle East may begin to ease. Market participants are optimistic that efforts to reopen the Strait of Hormuz could help stabilise global energy supplies, reducing oil prices and easing inflationary pressures that have weighed on central bank policy expectations.
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