05 April 2021

US Stock Futures Surge Amid Solid Jobs Report

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News shaping
the markets today

     

What’s happening: US stock futures rallied following the release of a better-than-expected jobs report for March.

What happened: The S&P 500 futures extended gains after closing above the 4,000 milestone for the first time in its history on Thursday.

Although the stock market remained closed on Friday on account of Good Friday, the Treasury market was open, and bond yields responded to the release of positive nonfarm payrolls data.

Why it matters: The US Labor Department released strong jobs data on Friday, showing that the economy had added the highest number of jobs in seven months, boosting market confidence about an economic rebound being around the corner.

The US economy added 916,000 for March and the unemployment rate declined to 6% from February’s 6.2%. The growth in jobs was driven by gains in the education and leisure & hospitality sectors. The headline payroll figure came in significantly ahead of the expectations of 675,000 job additions.

“(The payrolls data) sets a strong tone because certainly most people will assume that employment prospects look very, very good with the confluence of improving virus conditions and the stimulus that’s been added to the economy,” analyst Russell Price of Ameriprise Financial said in a note.

Adding to the upbeat sentiment was President Joe Biden’s announcement of a $2.25 trillion infrastructure plan.

Investors also cheered the spike in the ISM manufacturing PMI to 64.7 in March, representing the strongest level since December 1983 and a sharp improvement over the reading of 60.8 in February. Markets shrugged off an unexpected rise in initial jobless claims to 719,000 in the week ended March 27, from last week's 658,000.

Major stock indices had ended a holiday-shortened week on a strong note, with the S&P 500 settling above the 4,000 level for the first time. The Dow Jones index had risen 0.52% to close at 33,153.21, while the Nasdaq 100 added 1.82% to reach 13,329.51 on Thursday.

For the week, the S&P 500 and Dow Jones indices added 1.2% and 0.2%, respectively. The Nasdaq 100 was the outperformer, recording gains of more than 2%.

The 10-year Treasury note came under some selling pressure following the release of jobs data, which sent the yield higher to 1.702% on Friday.

What to watch: Investors await a basket of economic reports from the US, including composite PMI, services PMI, ISM New York index, ISM services PMI and factory orders. The IHS Markit composite PMI might decline slightly to 59.1 in March, from 59.5 in February, while the services PMI is expected to improve to 60, from the previous month’s 58.8. The ISM services PMI is projected to rise to 58.5 in March, from 55.3 in February. Analysts expect new orders for US manufactured goods to drop 0.5% in February.

US stock futures added to gains this morning, pointing towards a strong start on Wall Street today. Dow Jones, S&P and Nasdaq futures had risen by 0.65%, 0.42% and 0.08%, respectively, at 5am GMT.

The Markets Today

     

Bitcoin will be in focus today after surging past the $59,000 mark over the weekend.

Context: Bitcoin has maintained its uptrend so far this month, after delivering positive returns for the sixth consecutive month in March.

Details: Bitcoin staged a sharp recovery last week, after witnessing a massive sell-off in the previous week.

Market sentiment remained bullish last month, with traditional financial firms beginning to invest meaningfully into cryptocurrencies. The rebound in Bitcoin prices last week was also driven by Visa and PayPal allowing its customers to make payments using their cryptocurrency holdings.

Bitcoin has recorded a whopping return of more than 800% for fiscal 2020-21. The price rose from around $6,641 on April 1 last year to about $58,793 on March 31, 2021. The crypto king also recorded a historical high of $61,711.87 on March 13.

Meanwhile, the price of the world’s second largest cryptocurrency, Ethereum, also surged sharply above the $2,000 level. Ethereum has returned 1,272% to investors in fiscal 2020-21.

Bitcoin was trading close to $57,200 at around 5am GMT today, with some profit taking after its climb past the $59,000 level over the weekend.

What to watch: Investors will monitor institutional investment in Bitcoin. Predictions range from JPMorgan’s price target of $130,000 for the long term to BTIG’s expectation of prices reaching $95,000 by the end of 2022 and Pantera Capital’s estimate of $115,000 by the end of summer 2021.

In the near term, the big question is whether Bitcoin will be able to recapture the major $60,000 resistance level or if another pullback in prices is on the cards.

Other Markets: European trading indices closed higher on Thursday, with the FTSE 100, German DAX 30, French 40 and STOXX Europe 600 up by 0.35%, 0.66%, 0.59% and 0.61%, respectively.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

Turkey’s consumer prices and producer prices, Spain's consumer confidence indicator, Central Bank of Brazil’s focus market readout, Mexico’s manufacturing confidence index and manufacturing PMI, Argentina’s tax revenue as well as the IMF/World Bank spring meetings.

 

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