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US Stocks Tank Ahead Of NFP Data

The news shaping the markets today

US announced sanctions on Russia’s tech companies. Increased geopolitical tensions affected investor risk appetite and sent the US dollar index higher this morning.


Indonesia’s annual inflation rate accelerated to 2.64% in March, from 2.06% in the previous month. However, the IDR/USD forex pair remained elevated this morning.


China’s general manufacturing PMI fell to a 25-month low of 48.1 in March, from February’s level of 50.4, which sent the CNY/USD pair lower in forex trading this morning.


Singapore’s private home prices rose 0.4% during the three months to March, slowing from a 5.0% increase in the earlier quarter. However, the SGD/USD forex pair remained under pressure after the news.


Japan’s manufacturing PMI was revised higher to 54.1 in March, versus the preliminary reading of 53.2. Despite this, the JPY/USD pair declined in forex trading this morning.

 

What’s happening: All major US indices recorded losses on Thursday, ahead of the all-important NFP (nonfarm payrolls) report.

What happened: The US Labor Department is scheduled to release its jobs report for March today at 1230 GMT (0830 ET).

The US economy had recorded a spike in payrolls in February. With the Federal Reserve set to raise interest rates again, the upcoming jobs report is expected to offer some insight into the extent of the hike.

What are the estimate: Analysts expect the US to report another strong rise in jobs and easing of the unemployment rate in March.

  • Non-farm payrolls are projected to rise by 490,000, following 678,000 job additions in the previous month. With this, the US would have recovered more than 90% of the jobs lost during the pandemic.
  • The unemployment rate is expected to ease to 3.7%, from the previous reading of 3.8%.

Why it matters:

The US labour market has recovered significantly from the worst days of the pandemic, when the country recorded more than 20 million job losses.

Monthly job additions have risen sharply, averaging more than half a million over the past 12 months, versus the monthly average of 164,000 in 2019.

Although the high job additions point to an economic recovery being underway, it also serves as a reminder that the strong growth is likely to ease soon with the economy returning to normal levels.

On the other hand, the US continues to face labour shortages, putting several sectors of the economy under significant pressure. The country created 11.3 million jobs during February, but merely 6.7 million of those were filled.

The US also recorded weekly jobless claims at around 202,000, slightly higher than the consensus estimates, but in-line with the pre-covid levels. The labour force participation rate came in at 62.3% for February, below the pre-pandemic figure of 63.4%.

Wages rose slightly last month, and continues to lag inflation, with the latest CPI data showing inflation surging to a 40-year high in February.

What to watch: Markets will monitor updates from the Federal Reserve after the release of the jobs report, as this is expected to impact the central bank’s rate decision.

The markets today

European stocks will be in focus today ahead of a couple of economic reports from the common bloc

 

Context: European markets closed lower on the final trading day of March, as investors continued to monitor the Russia-Ukraine crisis.

Details: The ongoing Russia-Ukraine crisis and concerns over high inflation dominated overall market sentiment in March.

Crude oil prices fell after US President Joe Biden announced plans to release 1 million barrels of oil a day from the country’s strategic petroleum reserve.

Investors remained cautious despite strong economic data from the Eurozone. The unemployment rate in the common bloc eased to a record low of 6.8% in February, from 6.9% in the previous month and 8.2% in year-ago period. Retail sales in Germany grew 0.3% in February.

The pan-European Stoxx 600 shed 0.94% to close at 455.86 on Thursday but recorded monthly gains of 0.8%. The European index closed the first quarter of the year down 6.3%, its worst three-month performance in around two years.

London’s FTSE 100 fell 0.83% to close at 7,515.68 on Thursday, while the DAX 40 and CAC 40 lost 1.31% and 1.21%, respectively.

What to watch: Traders await the release of economic data on manufacturing PMI and inflation rate from the Eurozone. The S&P Global manufacturing PMI is expected to decline to 57 in March, from 58.2 in February. The bloc’s annual inflation rate is projected to accelerate to 6.6% in March, from 5.9% in the prior month.

Investors will also keep an eye on rising covid-19 cases in Europe and China and the ongoing situation between Russia and Ukraine.

Other Markets: US indices closed lower on Thursday, with the Dow Jones, S&P 500 and Nasdaq 100 down by 1.56%, 1.57% and 1.55%, respectively.

Support & resistances for today

Technical Levels News Sentiment
EUR/USD – 1.1062 and 1.1068 Positive
USD/JPY – 122.54 and 122.70 Positive
Nasdaq 100 – 14788.81 and 14936.69 Positive
Dow Jones – 34601.23 and 34865.85 Negative
Gold – 1933.06 and 1936.86 Negative

 

Market snapshot

What else to watch today

Russia’s manufacturing PMI and money supply M2, Turkey’s manufacturing PMI, Spain’s manufacturing PMI and total vehicle sales, Italy’s manufacturing PMI and car registrations, France’s manufacturing PMI, Germany’s manufacturing PMI, UK’s manufacturing PMI, France’s new car registrations, South Africa’s manufacturing PMI and total vehicle sales, India’s foreign exchange reserves, balance of trade, exports and imports, Brazil’s industrial output, manufacturing PMI, balance of trade and value of loans, Mexico’s manufacturing confidence index and manufacturing PMI, Canada’s manufacturing PMI, as well as US manufacturing PMI, ISM manufacturing PMI, total vehicle sales and Baker Hughes crude oil rigs.

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