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What’s happening: US stocks closed mostly higher on Friday as investors digested the nonfarm payrolls (NFP) report for November.
What happened: The S&P 500 and Nasdaq 100 surged to record closing highs as the latest jobs fuelled speculations of the US Federal Reserve announcing an interest rate cut this month.
Strong projections from Lululemon Athletica and other major firms also provided a boost to stock indices on Friday.
Why it matters: Data released by the US Labor Department showed job growth accelerated in November. However, a rise in the unemployment rate signalled weakness in the labour market.
The US economy added 227,000 jobs in November, compared to merely 36,000 job adds in October. The gains in October were impacted by strikes at Boeing, Hurricane Helene and Hurricane Milton. The November job adds came in higher than market estimates of 200,000.
The unemployment rate rose to 4.2% in November, from 4.1% in the previous month, which met market estimates. Average hourly earnings rose by 0.4% to $35.61 in November, higher than market estimates of a 0.3% rise.
The higher-than-expected unemployment rate sparked fresh speculations of the Fed raising its benchmark interest rate by at least 25 basis points (bps) at its policy meeting on December 17-18. The US central bank has slashed interest rates by 75 bps since September.
The year-ahead inflation expectations increased to 2.9% in December, the highest level in five months, compared to 2.6% in November. The figure was also higher than market estimates of 2.7%.
The S&P 500 consumer discretionary index closed at a record high, gaining 2.4% during the session. Shares of Lululemon Athletica climbed around 16% on Friday after the company raised its guidance for the full year. Ulta Beauty’s stock gained added around 9% after the cosmetics retailer raised its profit outlook for the year.
The S&P 500 climbed 15.16 points, or 0.25%, to settle at 6,090.27, notching its 57th record closing high for the year. The Nasdaq 100 jumped 0.92% to close at a record 21,622.25 on Friday.
However, the Dow Jones settled lower on Friday, as a decline in UnitedHealth’s stock weighed on the blue-chip index. The 30-stock index declined 123.19 points, or 0.28%, to close at 44,642.52.
What to watch: Investors await the release of economic data on wholesale inventories (1900 UAE Time) from the US today. Analysts expect US wholesale inventories to grow by 0.2% to $905 billion in October, compared to a 0.2% decline in the previous month.
Data on inflation rate, due to be released on Wednesday, will also remain in focus. Analysts expect the inflation rate to accelerate to 2.7% year-over-year in November, from 2.6% in the previous month.
Context: The CAD/USD forex pair rose slightly this morning as investors assessed Friday’s jobs report.
Details: The Canadian dollar fell past the key 1.41 support level, reaching its weakest level since April 2020 on Friday.
Canada’s unemployment rate rose to 6.8% in November, from 6.5% in the previous month. The figure came in higher than market estimates of 6.6% and marked the worst reading since September 2021.
The rise in the jobless rate sparked speculations of the Bank of Canada lowering its benchmark interest rate by 50bps.
Another data release showed Canada’s economy growing at an annualised rate of 1% in the third quarter, marking a slowdown from the 2.2% recorded in the previous quarter. The figure was also lower than the central bank’s 1.5% estimates.
The Ivey Purchasing Managers index in Canada climbed to 52.3 in November, versus a reading of 52 in October. Although this marked an improvement, the figure was short of market estimates of 53.1.
Meanwhile, employment in Canada rose by 51,000 in November, above market expectations of 25,000.
Strength in price of crude oil, one of Canada’s major exports, provided a boost to the loonie. WTI crude oil prices gained around 0.6% to $67.57 per barrel this morning.
Weakness in the US dollar also lent support to the CAD/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, edged lower to 106.04 this morning.
The CAD/USD forex pair rose about 0.1% to 1.4152 this morning. The S&P/TSX Composite Index rose 0.05% to close at 25,691.80 on Friday.
What to watch: Investors await the Bank of Canada’s interest rate decision on Wednesday, with the central bank widely expected to cut rates by another 50 basis points.
Other Markets: European indices closed mostly higher on Friday, with the DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.13%, 1.31% and 0.18%, respectively, and the FTSE 100 down by 0.49%.
US President Joe Biden said his government will provide further military assistance worth $988 million to Ukraine. The news sent the RUB/USD pair lower in forex trading this morning.
Ireland’s BNP Paribas Real Estate Construction PMI fell to 47.5 in November, from 49.4 in the previous month. The latest reading being the weakest since June exerted pressure on the EUR/USD forex pair.
China’s producer prices fell by 2.5% year-over-year in November, compared to a 2.9% decline in the previous month. The latest decline being lower than market estimates of 2.8% sent the CNY/USD pair lower in forex trading this morning.
Australia’s building permits rose by 4.2% to 15,498 units in October, compared to a revised 5.8% gain in September. The latest reading was in-line with the flash estimates, which lent support to the AUD/USD forex pair.
Japan’s economy expanded by 1.2% on an annualised basis in the third quarter, better than market expectations of 0.9%, which sent the JPY/USD pair higher in forex trading this morning.
Singapore’s foreign exchange reserves (1300 UAE Time), Mexico’s inflation rate (1600 UAE Time), France’s 12-month BTF auction (1800 UAE Time), 3-month BTF auction (1800 UAE Time) and 6-month BTF auction (1800 UAE Time), as well as US 3-month bill auction (1830 UAE Time) and 6-month bill auction (2030 UAE Time).
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