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Monday, September 05, 2022, 8.45am GMT
Ukraine’s President Volodymyr Zelenskyy said he had called for an urgent allocation of the next round of aid from the European Union. Zelenskyy also discussed another wave of sanctions on Russia with European Commission chief Ursula von der Leyen. US crude oil futures traded higher on the news.
Australia’s business inventories grew by 0.3% in the first quarter, versus 3.6% growth in the previous quarter. The latest reading also missed market estimates of 1.6%, exerting pressure on the AUD/USD forex pair.
China’s general services PMI fell to 55.0 in August, from July’s 15-month high of 55.5, which sent the CNY/USD pair lower in forex trading this morning.
Japan’s composite PMI fell to 49.4 in August, from July’s final reading of 50.2. This was the first decline in the country’s private sector activity since February, which exerted pressure on the JPY/USD forex pair.
Hong Kong’s S&P Global PMI declined to 51.2 in August, from 52.3 in the prior month. However, the latest reading signalled the fifth consecutive month of growth in private sector activity and sent the HKD/USD pair higher in forex trading this morning.
What’s happening: European stocks closed higher on Friday, as investors cheered the jobs report from the US.
What happened: The US economy added more jobs than expected in August, although one of the key metrics came in below projections.
European equity markets recorded gains for the first time in several days on Friday.
Why it matters: Equity markets around the world had been under pressure after Fed Chairman Jerome Powell issued hawkish remarks at the central bank’s annual policy forum in Jackson Hole, Wyoming.
Markets in Europe started September negatively, with Europe’s blue-chip index shedding around 1.8% on Thursday, after closing August in the red zone.
Investors have been concerned about an economic slowdown in Europe, amid rising inflation and the energy crisis due to the ongoing Ukraine- Russia war.
The US Bureau of Labor Statistics reported data on Friday that showed the economy had added 315,000 payrolls in August, following a 526,000 gain in the previous month. The figure came in higher than market expectations of 300,000 job additions. The nonfarm employment figure was 240,000 higher than the pre-pandemic level recorded in February 2020.
The US unemployment rate rose to 3.7% in August, the highest level since February and above market views of 3.5%. Average hourly earnings on private nonfarm payrolls rose by just 0.3% to $32.36 in August, easing from 0.5% in July and below market expectations of a 0.4% increase.
The latest jobs data indicated that the US labour market might be cooling, easing concerns of the Federal Reserve being more aggressive in raising interest rates, which also lowered speculations around the extent of a rate hike the ECB may announce at its upcoming meeting.
Reports of Russia planning to resume flows along the Gazprom pipeline also provided a boost to market sentiment.
The pan-European Stoxx 600 rose 2.04% to close at 415.97 on Friday, recording gains for the first time in the last five sessions, with autos stocks leading the rally. All sectors settled in the positive zone.
London’s FTSE 100 jumped 1.86% to settle at 7,281.19, while DAX 40 and CAC 40 added 3.33% and 2.21%, respectively.
What to watch: Investors await the release of economic data on services PMI, composite PMI and retail sales from the Eurozone today. The S&P Global Eurozone services PMI is expected to decline to 50.2 in August, from 51.2 in July, while the composite PMI is projected to decline to 49.2 in August, from 49.9 in the previous month. Retail sales, which fell 1.2% in June, are expected to grow by 0.3% in July.
Context: The GBP/USD forex pair closed lower amid a volatile session on Friday and recorded losses for the week as well.
Details: Britain will announce its new Prime Minister after the Conservative Party’s leadership contest concludes.
The country’s outgoing PM Boris Johnson will be replaced by former Chancellor Rishi Sunak or Foreign Secretary Liz Truss. Queen Elizabeth II is set to appoint the country’s new Prime Minister in Scotland on September 6 and will not be travelling to London to make the announcement.
The Bank of England is scheduled to meet on September 15 and is widely expected to announce some aggressive moves to combat surging inflation in the country.
The GBP/USD forex pair settled lower by around 0.3% at 1.1512 on Friday, after hitting its lowest level since March 2020 on Thursday. The sterling fell about 1.9% versus the US dollar last week. In August, the GBP/USD forex pair recorded its worst monthly performance since October 2016.
The sterling fell 0.42% against the euro to 86.51 on Friday. The FTSE 100 index closed higher by around 1.9%, following a 4-session sell-off, amid a rise in banking and energy stocks.
What to watch: Investors will keep an eye on the announcement of the new UK Prime Minister. Markets also await the release of data on new car registrations, services PMI and composite PMI from the UK today. The S&P Global/CIPS UK services PMI is projected to decline to 52.5 in August, from 52.6 in July, while the composite PMI is projected to slide to 50.9 in August, from 52.1 in the prior month.
Other Markets: US indices closed lower on Friday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 1.07%, 1.07% and 1.44%, respectively.
|Technical Levels||News Sentiment|
|USD/JPY – 140.19 and 140.41||Negative|
|AUD/USD – 0.6773 and 0.6786||Negative|
|Nasdaq 100 – 12056.48 and 12130.70||Positive|
|FTSE 100 – 7274.16 and 7289.21||Negative|
|WTI Crude Oil – 88.10 and 88.49||Positive|
|Futures at 0400 (GMT)|
|EUR/USD (0.9914, -0.43%)||Dow ($31,349, 0.12%)||Brent ($94.70, 1.8%)|
|GBP/USD (1.1475, -0.32%)||S&P500 ($3,928, 0.10%)||WTI ($88.48, 1.9%)|
|USD/JPY (140.29, 0.06%)||Nasdaq ($12,098, -0.05%)||Gold ($1,723, 0.1%)|
Russia’s services PMI and composite PMI, Turkey’s inflation rate and producer inflation, South Africa’s S&P Global PMI, Spain’s services PMI and composite PMI, Italy’s services PMI and composite PMI, France’s services PMI, composite PMI and retail sales, Germany’s services PMI and composite PMI, Mexico’s consumer confidence, as well as Brazil’s services PMI, composite PMI and Central Bank of Brazil’s focus market readout.
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