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US Stocks Lose Steam Despite Upbeat NFP Report

The news shaping the markets today

Ukraine officials said that Russia’s forces have intensified night time shelling of cities in the country’s centre, north and south, which provided a boost to the US dollar. The dollar index gained around 0.4% this morning.


China’s trade surplus increased to $115.95 billion in January – February combined, compared to $103.25 billion in the year-ago month. However, the CNY/USD forex pair traded lower this morning.


Moody’s Credit Rating reduced long-term issuer and senior unsecured debt ratings of Russia from B3 to Ca. The RUB/USD pair traded mostly flat in forex trading this morning.


Australia’s job advertisements surged 8.4% in February to a fresh pandemic high level, following a revised 0.7% decline in the previous month, lending support to the AUD/USD forex pair this morning.


U.S. crude oil futures surged to their strongest level this morning since 2008 this morning, amid increased risk of Western ban on Russia’s oil imports.

 

What’s happening: US stocks closed lower on Friday, despite better-than-expected NFP (nonfarm payrolls) data.

What happened: Traders sold Wall Street stocks on Friday, with a decline in risk appetite amid the Russia-Ukraine crisis.

Investors remained concerned as Vladimir Putin called for Zelenskyy to surrender while continuing the shelling nightmare.

Why it matters: The broader sell-off in Wall Street stocks followed reports of smoke emanating from Europe’s largest nuclear power plant in Ukraine and subsequent news of Russian forces seizing the plant in Zaporizhzhia.

Energy prices spiked following the attack on the nuclear power plant. WTI crude climbed around 6.8% to $115.00 a barrel on Friday.

The news from Ukraine overshadowed the US Labor Department’s upbeat jobs report for February. The US added 678,000 jobs in the month, significantly higher than the consensus estimate of 440,000. The country’s unemployment rate eased to 3.8%.

This was the final jobs report before the Federal Reserve’s next meeting, which is widely expected to result in a rate-hike announcement. Fed chief Jerome Powell had last week indicated a hike of 25 basis points this month.

Investors also shrugged off better-than-expected quarterly results reported by companies like Broadcom.

Financial stocks were among the worst performers on Friday, with shares of American Express and JPMorgan Chase declining by around 4% and 3%, respectively. Travel-related stocks also remained under pressure. Shares of United Airlines Holdings lost around 9%.

The Dow Jones index lost 179.86 points, or 0.53%, to settle at 33,614.80 on Friday, after dipping more than 500 points earlier in the session. The 30-stock index recorded losses for the fourth consecutive week. The S&P 500 fell 0.79% to settle at 4,328.87, while the Nasdaq 100 moved lower by 1.41% to close at 13,837.83.

What to watch: Markets will keep an eye on the Russia-Ukraine situation. Investors also await the release of consumer credit data from the US today. Consumer credit had risen by $18.9 billion in December and is expected to grow by another $23.8 billion in January.

The markets today

The euro will be in focus today after recording sharp losses on Friday

 

Context: The EUR/USD forex pair dipped below the $1.10 mark for the first time in around two years on Friday.

Details: NFP data released by the US Labor Department on Friday showed a strengthening jobs market in the country, which supported the US dollar. The Russia-Ukraine tensions added to the greenback’s strength, while exerting pressure on the euro, as the war could slam the breaks on Eurozone’s economic growth.

Markets were earlier expecting the US Fed to increase interest rates by 50 basis points at its policy meeting in two weeks. However, the escalating concerns in Ukraine led Federal Reserve Chairman Jerome Powell to consider a rate hike of only 25 basis points.

European stocks dipped one-year lows amid the ongoing Russia-Ukraine concerns, with experts projecting further acceleration in inflation.

Positive economic data did little for euro sentiment on Friday. Eurozone reported 0.2% growth in retail sales in January, following a 2.7% decline in December. Although the IHS Markit Eurozone construction PMI slipped to 56.3 in February, from 56.6 in the prior month, it still represented expansion.

The euro fell 1.2% to settle at $1.0935 on Friday, slipping below the $1.10 mark for the first time in approximately two years. The EUR/USD forex pair lost around 3% last week.

The euro also dipped to a new seven-year low versus the Swiss franc. Against the British pound, the common bloc’s shared currency hit its lowest level since July 2016.

The US dollar index, which measures the greenback’s performance versus a basket of major currencies, gained 0.7% to close at 98.51 on Friday.

What to watch: Traders await economic reports from several European countries today. Ongoing tensions between Russia and Ukraine will also remain in focus.

Other Markets: European trading indices closed lower on Friday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 down by 3.48%, 4.41%, 4.97% and 3.56%, respectively.

Support & resistances for today

Technical Levels News Sentiment
GBP/USD – 1.3191 and 1.3207 Positive
Gold – 1988.14 and 1998.94 Positive
WTI Crude Oil – 124.03 and 126.45 Positive
Nasdaq 100 – 13780.51 and 13879.62 Positive
Dow Jones – 33473.94 and 33704.59 Positive

 

Market snapshot

What else to watch today

South Africa’s foreign exchange reserves, Germany’s factory orders, retail sales and current account, UK’s house price index, France’s foreign exchange reserves, China’s foreign exchange reserves, Brazil’s services PMI, composite PMI, net payrolls and Central Bank of Brazil focus market readout, Mexico’s consumer confidence indicator, Turkey’s treasury cash balance, as well as Russia’s gross domestic product.


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