Official data released by the U.S. Bureau of Labor Statistics showed continued strength in labor market conditions during March, with the U.S. economy adding the equivalent of 303,000 jobs, compared to 270,000 jobs in February. The unemployment rate also fell to 3.8% at the same time, better than market expectations which indicated unemployment would remain stable at the February level of 3.9%.

Labor market data also revealed a slowdown in the average annual wage growth to 4.1% in March, compared to 4.3% in February, while the average wage growth accelerated to 0.3% from 0.2% in February.

Global markets, whether stocks, major currencies, or commodities, quickly reacted to these strong developments. Below, it can be explained how markets were affected by the U.S. labor market data:

First: Global stock markets

U.S. stock futures trimmed their early gains immediately after the release of the U.S. labor market data, which raised market expectations about the Federal Reserve keeping interest rates at elevated levels for a longer period due to strong consumer spending driven by rising employment rates in the United States.

At the same time, all European stock indices fell due to the U.S. developments alongside slower-than-expected growth in factory orders in Germany. Data released this morning revealed that factory orders in the country grew by 0.2% in February, while markets expected growth around 0.8%, raising global market concerns about damage to industrial activity in the Eurozone's largest economies and its negative implications on the economic growth of the region as a whole.

Second: Major foreign exchange market

The U.S. dollar gained strongly immediately after the release of the U.S. labor market data with increasing optimism in global markets about the continuation of a tightening approach in the United States for a longer period and not rushing to cut interest rates, especially since Federal Reserve member Kashkari hinted that rates might not be cut this year if the path to reducing inflation inside the United States is hindered. This led to the dollar rising at the expense of all its major currency pairs.

Third: Prominent commodities market

Gold prices recorded a sharp decline following the U.S. labor market data, which strengthened dollar gains in trading, leading to a decrease in global demand for gold priced in the greenback, as the yellow metal appeared to be a more costly investment opportunity for investors holding foreign currencies other than the dollar.

Crude oil price movements were also somewhat affected by U.S. labor market developments, as the tightening approach in the United States impacts U.S. economic activity and thus U.S. demand for crude oil, with the United States being the largest crude oil consumer worldwide.

However, tensions in the Middle East supported oil movements in global markets, especially amid increasing market concerns about Iran’s response to the military attack launched by Israeli forces on the Iranian consulate in Syria earlier this week and its impact on crude oil supplies in the markets.