Compartir esta página

Auhtor
Michael Hewson
Chief Market Analyst
CMC Markets UK


www.cmcmarkets.com

Markets slip back ahead of November payrolls

02.12.2022
05:15GMT Friday 2nd December 2022 Markets slip back ahead of November payrolls By Michael Hewson (Chief Market Analyst at CMC Markets UK)

European markets got off to a modestly positive start to the month, hitting 6-month highs before slipping back into the close, with the FTSE100 lagging after failing to push through the 7,600 level.

US markets underwent a little bit of a mixed session with the Nasdaq edging higher, while the S&P500 and Dow slipped back. US treasury yields also slid back with the 10-year yield sliding below its October lows to 3.5%.

Today’s European session will see the focus shift back to the US and the November jobs report.

Given Powell’s comments on Wednesday and yesterday’s PCE inflation data, and ISM numbers there might be a case for saying that today’s jobs report probably doesn’t matter that much.

We already know that we’ll see a 50bps rate hike in just under two weeks’ time, and then it's really a question of what comes after that.

A lot of questions have been raised as to what prompted a slight change of tack from Powell in contrast to what was some significant push back at the November press conference when he was told that stock markets were higher after the decision.

This more relaxed attitude may speak to some concerns about the extent of the economic weakness in the data that we’ve seen this week, which may in some part be helping to act as a drag on the inflation numbers.

Nonetheless, despite increasing evidence of a slowdown in the manufacturing sector, services sector jobs are still being created, while vacancy rates are still high.  

This week we saw weekly jobless claims fall back to 225k after a brief spike up to 241k.

In October non-farm payrolls came in at 261k, while the September jobs number was revised up to 315k. Slightly more disappointing was the fact that the unemployment rate edged up to 3.7%, while wage growth slowed to 4.7% from 5%.

The report also served to indicate that there was little sign of a wage price spiral despite still high levels of vacancies.

Despite the resilience being displayed in the US labour market there are rising pockets of concern.

The current earnings season reports are seeing the big tech companies letting people go in their thousands.

Amazon for example has announced the loss of over 10k jobs worldwide with more to come, while Meta recently announced the loss of 11k positions.

Twitter has also seen people leave the business, some of them voluntarily because they don’t want to work for new owner Elon Musk.

While not all these job losses are likely to be in the US there does appear to be a trend starting to build, although it is likely to take some time to filter through given that vacancy rates are still high.

On the flip side of the coin, it’s important to remember hiring trends tend to pick up in the lead up to Thanksgiving and the Christmas period on the back of temporary hires.

Expectations for November payrolls is for 200k jobs to be added, down from 261k, which would be the lowest number this year, in the same way this week's ADP report was a weak number. 

The unemployment rate is expected to tick higher to 3.8%, by virtue of a higher participation rate, while wage growth is forecast to remain subdued at 4.6%.

EUR/USD – pushed above the 1.0400 area and the 200-day SMA and appears to be on course for a move up to the June peaks at 1.0620, which is also the 38.2% retracement of the down move from 1.2350 to 0.9535.  

GBP/USD – broke up to the 1.2300 area, reversing 50% of the decline from the 1.4250 highs to the recent lows at 1.0342. This is likely to be a big obstacle to further gains towards 1.2760. Support comes in at the 1.2190 area and the 200-day SMA.  

EUR/GBP – sank back to the 200-day SMA and the 0.8540 area. This could act as support in the short term, with resistance now at the 0.8675 area. Below 0.8530 targets 0.8480.

USD/JPY – appears to be heading towards the 200-day SMA at 134.40 having broken below the 137.50 area. This should now act as resistance.

FTSE100 is expected to open 8 points lower at 7,550

DAX is expected to open 42 points lower at 14,448

CAC40 is expected to open 30 points lower at 6,724


CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction, or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. Professional clients: Losses can exceed deposits when spread betting and trading CFDs. Countdowns carry a level of risk to your capital as you could lose all of your investment. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice. Invest only what you can afford to lose. CMC Markets UK plc (173730) and CMC Spreadbet plc (170627) are authorised and regulated by the Financial Conduct Authority in the United Kingdom. CMC Markets UK plc and CMC Spreadbet plc are registered in England and Wales with Company Numbers 02448409 and 02589529 and with their registered offices at 133 Houndsditch, London, EC3A 7BX.
This communication is not intended as an offer or solicitation for the purchase or sale of a financial instrument or as an official confirmation of any transaction unless specifically presented as such.