Monday, January 13, 2020

Jobs growth in the US slows; traders prepare for volatile week ahead

Tags
  • China
  • Dollar
  • Gold
  • Stocks
  • NonFarm Payrolls

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Market Recap: Jobs growth in the US slows; traders prepare for volatile week ahead

US stocks fell from record highs on Friday after the US imposed additional sanctions on Iran. The US announced that it would impose more sanctions on Iran on sectors including manufacturing, mining and textile, likely in retaliation to Iran's attack on Iraqi air bases that housed US troops earlier last week. Stock markets retreated as tensions between both countries escalate, although an all-out-conflict seems to be unlikely.

Indexes Change (%) Net Change Closing Price
Dow Jones -0.46% -133.13 28,823.77
S&P500 -0.29% -9.35 3,265.35
Nasdaq -0.27% -24.57 9,178.86
*Source: Bloomberg

Most major indices still managed to post weekly gains last week despite rising tensions in the Middle East. Markets will likely be more volatile thanks to the signing of the US-China phase one trade agreement, and as 26 companies in the S&P500 index report their earnings this week.

Indexes Weekly Change (%) Net Change Closing Price
Dow Jones 0.66% 188.89 28,823.77
S&P500 0.94% 30.50 3,265.35
Nasdaq 1.75% 158.09 9,178.86
FTSE100 -0.45% -34.55 7,587.85
Euro Stoxx 0.43% 16.15 3,789.52
Nikkei 0.82% 193.95 23,204.86
KOSPI 1.38% 29.93 2,206.39
ASX200 2.90% 195.53 6,929.03
Hang Seng 0.66% 186.70 28,638.20
Straits Times 0.53% 17.13 3,255.95
*Source: Bloomberg

The dollar slipped against most major currencies on Monday, as US job openings in December grew less than expected, growing only 145,000 instead of the 160,000 that economists expected. The Dollar Index dropped as much as 0.16% to 97.376 in the first 10 minutes after the release of the report. In Canada, labour market data was better than expected, with employment for December rising by 35,200 while unemployment rate dipping to 5.6%.

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Investors shifted to safe haven assets after the announcement of additional sanctions renewed fears of escalating tensions in the US-Iran conflict. Gold and yen both gained on Friday. Demand in the fixed income market rose as well, pushing US Treasuries higher on Friday. Benchmark 10-year yields fell 3bps to 1.82% as a result.

Safe Haven Assets Change (%) Net Change Closing Price
Gold 0.65% 10.02 1,562.34
Silver 1.19% 0.21 17.85
JPY 0.06% 0.07 109.45
*Source: Bloomberg
US Treasury yields Change (bps) Yield (%)
2-Year -1 1.57%
10-Year -3 1.82%
30-Year -5 2.28%
*Source: Bloomberg

Stocks in Asia looks mixed on Monday morning as investors prepare for a volatile week. The KOSPI started the day 0.09% lower but recovered later in the morning, while the ASX200 fell after Australia's market open. The Tokyo Stock Exchange is closed today for a bank holiday.

Asia Change (%) Net Change Last Price As of (GMT +8)
KOSPI Index 0.27% 5.88 2,212.27 8:49:50 AM
ASX200 Index -0.57% -39.23 6,889.80 8:49:35 AM
Hang Seng Futures 0.36% 102.00 28,768.00 2:59:55 AM
*Source: Bloomberg

Focus of this week will be on the US-China phase one agreement set to be signed on January 15th in the US. Over the week, quarterly earnings reports will be released from major banks from the US, starting with JPMorgan Chase, Citigroup and Wells Fargo on Tuesday. Inflation and consumer sentiment in the US and the ECB's December monetary policy meeting minutes will be released this week as well.

Economic releases for the day ahead include (all timings in GMT +8):

  • UK Nov Industrial Production (5.30pm)
  • UK Nov GDP (5.30pm)
  • UK Nov Manufacturing Production (5.30pm)