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US stocks surge even after mixed jobs report

 

Monday, November 07, 2022

The news shaping the markets today

The Russia-Ukraine war is now in its ninth month. Missiles continuing to strike major cities in Ukraine lent support to the safe-haven US dollar index.


Colombia’s annual inflation rate accelerated for the fifth consecutive month to 12.22% in October, from 11.44% a month ago. The country recording its highest inflation rate since March 1999 exerted pressure on the CAD/USD forex pair.


Brazil’s services PMI climbed to 54 in October, from 51.9 in the prior month. Although the latest reading signalled the strongest pace of expansion in services activity since July, the BRL/USD pair remained flat in forex trading this morning.


Sri Lanka said the number of foreign tourist arrivals surged 84.5% year-over-year to 42,026 in October. However, the LKR/USD forex pair remained broadly flat due to strength in the US dollar.


Canada’s economy added 108,300 jobs in October, much higher than the consensus estimates of 10,000. However, the CAD/USD pair declined in forex trading this morning.

 

What’s happening: US stocks closed higher on Friday as investors assessed the latest jobs data.

What happened: Wall Street snapped a four-session losing streak despite the US releasing mixed nonfarm payrolls (NFP) data for October.

Investors also digested comments from Federal Reserve officials regarding interest rate increases going ahead.

Why it matters: The US labour market data has remained one of the major focus areas for markets as the country’s central bank has been looking for signs of strength to continue its aggressive interest rate hikes.

Markets were concerned after Fed Chairman Jerome Powell commented that it was too early to consider pausing rate hikes. However, investor sentiment was supported by statements released by Fed officials about a potential slowing of the pace of rate increases.

The S&P 500 index climbed as much as 2% earlier in the session, following the release of NFP data. However, the index pared gains and fell into negative territory for a brief period, before resuming its upturn later in the session.

The NFP report, released on Friday, showed that the US economy added 261,000 jobs in October, higher than the consensus estimates of 200,000. The report also showed average hourly earnings rising higher than expectations. However, the country’s unemployment rate rose to 3.7% in October, which could push the Federal Reserve to consider lowering its interest rate increases starting December.

Hopes of an easing in China’s zero-covid policy also provided some support to investor sentiment. Shares of US-listed Chinese companies, including Alibaba and JD.com, recorded sharp gains on Friday. Shares of Starbucks Corp also climbed more than 8% after the company reported quarterly earnings that beat Street expectations.

The Dow Jones index jumped around 402 points, or 1.26%, to close at 32,403.22, while the S&P 500 added 1.36% to reach 3,770.55 and the Nasdaq 100 surged 1.56% to settle at 10,857.03 on Friday.

For the week, the Dow Jones index lost around 1.39%, ending a four-week winning streak, while the S&P shed about 3.3%. The Nasdaq declined around 5.6% to record its biggest weekly percentage drop since January.

What to watch: Investors await the release of consumer inflation data, due this week. Markets will also focus on the US midterm elections on November 8.

The markets today

Bitcoin will be in focus today after hitting a seven-week high last week

Context: Bitcoin climbed above the $21,000 level following the release of the US jobs report.

Details: Bitcoin prices have hovered around the $20,000 resistance level for the past 10 days or so.

Cryptocurrency markets were supported by an improvement in investor risk appetite following the latest nonfarm payrolls (NFP) data by the US and some other positive economic reports last week. The US NFP data showed the economy had added 261,000 jobs in October, topping market estimates of 200,000.

The world’s most valuable cryptocurrency rose to a seven-week high last week. Ethereum, the second-largest cryptocurrency by market value, also breached the $1,600 resistance level for the first time since mid-September.

However, Dogecoin fell 4.7% to $0.1179 this morning, amid high volatility after Elon Musk shared a picture of a Shiba Inu dog wearing Twitter’s branded t-shirt.

What are expectations: Markets will focus on major economic reports and comments from the Fed chief regarding the pace of rate hikes. Traders will also keep an eye on comments or tweets from Elon Musk, which typically moves the crypto market.

Other Markets: European trading indices closed higher on Friday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 up by 2.03%, 2.51%, 2.77% and 1.81%, respectively.

Support & resistances for today

Technical Levels News Sentiment
USD/JPY  – 147.12 and 147.26 Negative
GBP/USD – 1.1318 and 1.1328 Negative
Copper – 3.5972 and 3.6154 Positive
WTI Crude Oil  – 91.11 and 91.51 Negative
FTSE 100 – 7331.61 and 7384.06 Positive

Market snapshot

Futures at 0400 (GMT)
EUR/USD (0.9936, -0.24%) Dow ($32,375, -0.16%) Brent ($97.34, -1.3%)
GBP/USD (1.1328, -0.43%) S&P500 ($3,771, -0.23%) WTI ($91.20, -1.5%)
USD/JPY (147.21, 0.40%) Nasdaq ($10,860, -0.28%) Gold ($1,674, -0.1%)

What else to watch today

South Africa’s foreign exchange reserves, Germany’s industrial production and construction PMI, UK’s house price index, China’s foreign exchange reserves, Eurozone’s construction PMI, France’s construction PMI and car registrations, Italy’s construction PMI, Singapore’s foreign exchange reserves, Central Bank of Brazil’s focus market readout, Mexico’s consumer confidence, auto exports, gross fixed investment and car production, Turkey’s treasury cash balance, India’s balance of trade as well as US consumer credit.


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