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What’s happening: US stocks recorded losses on Friday, as investors digested the recent nonfarm payrolls (NFP) report.
What happened: The benchmark S&P 500 closed lower in a volatile trading session, after a mixed jobs report signalled a resilient labour market.
Wall Street stocks also closed the week in the red as investors remained concerned over the Fed’s aggressive monetary policy tightening.
Why it matters: Major US stock indices closed sharply lower on Thursday, with the S&P 500 recording its biggest daily percentage decline in six weeks, following the release of nonfarm payroll figures.
The NFP report released on Friday showed jobs growth in the US slowing more-than-projected in June after growing in the prior month. However, conditions in the labour market improved, with the unemployment rate declining from a seven-month high and wages continuing to rise.
The US economy added 209,000 jobs in June, following an addition of 306,000 jobs in May. Economists were projecting 225,000 job adds. The unemployment rate eased to 3.6% in June, from 3.7% in May, with average hourly earnings rising by 0.4%, topping market views of 0.3% growth.
Albeit mixed, the jobs report supported speculations of the Fed hiking interest rates by another 25 bps at its July meeting. During the June meeting, policymakers had signalled two more rate hikes this year.
Airline stocks were among the top performers, with shares of American Airlines, JetBlue Airways, and United Airlines settling higher on Friday.
All three major indices posted losses last week amid rate hike concerns and rising tensions between US and China.
The Dow Jones index fell 187.38 points, or 0.55%, to close at 33,734.88, while the S&P 500 lost 0.29% to reach 4,398.95 on Friday. The Nasdaq 100 shed 0.35% to settle at 15,036.85.
What to watch: Investors await the release of economic data on wholesale inventories and consumer inflation expectations from the US today. Wholesale inventories in the US are expected to decline 0.1% in May versus a 0.3% contraction in April. US consumer inflation expectations for the year ahead are projected to ease to 3.9% in June, from 4.1% in May.
Markets will also watch speeches from several Fed members today, which could provide some direction to Wall Street stocks.
Context: The CAD/USD forex pair recorded gains on Friday, following the release of domestic jobs data.
Details: Data from Statistics Canada showed the country’s economy added higher-than-expected jobs in June, which raised speculations of the Bank of Canada hiking interest rates on Wednesday. Last month, the central bank had raised its overnight rate to a 22-year high of 4.75% to combat soaring inflation.
Canada’s annual inflation rate eased to 3.4% in May, from 4.4% in April.
The Canadian economy added 59,900 jobs in June, the highest in five months and significantly above market estimates of 20,000, following an increase in full-time work. However, the unemployment rate in the country increased to 5.4% in June, from 5.2% in May. The figure was the highest since February 2022, but still below the pre-pandemic 12-month average. Economists were expecting a jobless rate of 5.3% for June.
The Ivey Purchasing Managers Index in Canada fell to 50.2 in June, from 53.5 in the prior month. Despite the downturn, the figure remained in the expansion zone.
Strength in the prices of crude oil, one of Canada’s major exports, also lent support to the loonie. WTI crude oil prices gained $2.06 to settle at $73.86 per barrel on Friday.
Weakness in the US dollar also drove the loonie higher. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.9% to 102.27 on Friday.
The CAD/USD forex pair rose around 0.7% to 1.3280 on Friday. The S&P/TSX Composite index gained 0.10% to close at 19,831.04, after recording losses in the prior session.
What are expectations: Traders await the release of data on building permits from Canada today. The total value of building permits in Canada, which fell by 18.8% to $9.6 billion in April, is expected to decline by 15.3% in May.
Other Markets: European indices closed mostly higher on Friday, with the DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.48%, 0.42% and 0.10%, respectively, and the FTSE 100 down by 0.32%.
The UK announced plans to supply 17 specialist firefighting vehicles to Ukraine in its ongoing war against Russia. The news sent the safe-haven US dollar index higher this morning.
China’s food prices rose by 2.3% year-over-year in June, accelerating from a 1.0% increase in the previous month, which exerted pressure on the CNY/USD forex pair.
Australia’s building permits grew 20.6% to 15,032 units in May. This coming in-line with the preliminary reading sent the AUD/USD pair slightly lower in forex trading this morning.
Indonesia’s motorbike sales jumped 66.6% year-over-year to 493,700 units in May, easing from a 113.4% surge a month ago, which exerted pressure on the IDR/USD forex pair.
Japan’s current account surplus widened to ¥1,862.4 billion in May from ¥773.4 billion in the year-ago month. However, markets were expecting a wider surplus of ¥1,884.5 billion, which sent the JPY/USD pair lower in forex trading this morning.
Turkey’s unemployment rate and labour force participation rate, Central Bank of Brazil’s focus market readout, South Africa’s SACCI business confidence index, Spain’s consumer confidence indicator, as well as US Manheim used vehicle value index and total consumer credit.
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