Global financial markets remained volatile on Friday as stronger-than-expected US employment data lifted the dollar and Treasury yields, putting pressure on gold prices.
Oil was also heading for its steepest weekly decline in years as investors assessed the possibility of de-escalation in the US-Iran conflict.
Meanwhile, Anthropic’s proposed blockbuster IPO faced growing uncertainty, with prospective investors reportedly pushing for a lower valuation following the sharp sell-off in AI-related stocks.
US nonfarm payrolls beat estimates, unemployment falls
The US labour market delivered a stronger-than-expected performance in October, adding 165,000 jobs compared with economists’ expectations of 59,000.
The unemployment rate declined to 4.1%, while revisions showed that August and September employment growth had been stronger than previously estimated.
Average hourly earnings increased 0.4% month-on-month and 3.1% year-on-year, exceeding expectations and potentially adding to inflation concerns.
The figures strengthened the case for further monetary tightening, with traders raising expectations of a December rate increase.
The report could complicate the Federal Reserve’s efforts to balance inflation control with labour market conditions, particularly as stronger wage growth and resilient employment suggest that the economy continues to withstand higher borrowing costs.
Gold prices slip as US payrolls strengthen
Gold prices declined on Friday after stronger-than-expected US nonfarm payrolls data reinforced expectations that the Federal Reserve could keep interest rates higher for longer.
Spot gold fell 0.65% to $4,060.73 an ounce, after dropping more than 1% earlier in the session to a low of $4,033.29.
US gold futures for December delivery settled 0.96% lower at $4,073.90.
Despite Friday’s decline, spot gold was up 5.2% for the week, putting it on track for its strongest weekly performance since August.
The US added 165,000 jobs in October, significantly exceeding economists’ expectations of 59,000. The unemployment rate also declined to 4.1%, indicating continued resilience in the labour market.
The data strengthened expectations of another Fed rate increase in December. Markets priced in an 81% probability of a hike, compared with 72.8% before the employment report.
A stronger dollar, which climbed to its highest level since October 29, and rising Treasury yields also weighed on bullion.
Higher interest rates increase the opportunity cost of holding non-yielding assets such as gold.
Oil prices post biggest weekly decline since pandemic
Oil prices were heading for a sharp weekly decline as expectations of a potential de-escalation in the US-Iran conflict reduced the geopolitical risk premium in crude markets.
Brent crude futures for January delivery was up 0.20% to $98.51 a barrel on Friday, while US West Texas Intermediate gained 0.54% to $91.04.
Brent was on track to lose approximately 16% for the week, which would mark its steepest weekly percentage decline since the beginning of the Covid-19 pandemic. WTI was heading for a 12% weekly decline.
The Democratic Party’s gains in the US midterm elections raised hopes of a potential easing of tensions involving Iran and an increase in crude exports from the region.
However, attacks on vessels in the Gulf and the Strait of Hormuz continued to support prices.
A Greek ship manager reported that a seafarer was killed in an explosion aboard an oil products tanker on November 5, believed to have been caused by a missile attack.
Signs of an emerging supply surplus also weighed on the market, with demand destruction and changing crude supply patterns adding to concerns about oversupply.
Anthropic IPO valuation faces potential $1 trillion reset
Anthropic’s proposed initial public offering is facing growing investor resistance as the recent technology stock selloff raises doubts about its expected $1.5 trillion valuation.
At least three major investors believe the AI company may have to lower its valuation, with one suggesting it could be closer to $1 trillion, according to The Wall Street Journal.
The company could also reduce its fundraising target from approximately $100 billion to $80 billion.
The concerns follow a sharp selloff in AI-related stocks, with the Nasdaq Composite falling as much as 5% on Thursday.
Investors are also assessing Anthropic’s financial performance and infrastructure commitments.
Its revenue run rate exceeded $80 billion at the end of October, according to the Journal, while its amended IPO filing showed third-quarter revenue of $17 billion.
The company has approximately $895.4 billion in commitments for computing capacity, chips and other infrastructure.
The IPO roadshow was initially expected to begin during the week of November 9, with pricing anticipated the following week.
However, deteriorating market conditions could force the company to reconsider its timetable.
AI disclosure: AI tools assisted with research and drafting of this piece. An ICD editor reviewed the facts, sources and wording before publication. Any opinions or analysis are Invezz’s, not those of an automated system.
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