Market News & Analysis


Market Brief: NFP set to disappoint?

  • At midday in London, NZD and AUD were among the strongest, while GBP and USD were the weak links.

  • Today’s US nonfarm payroll report is – for obvious reason – the main focal point. A headline jobs growth of 145K is expected, with wages seen rising by 0.3% month-over-month. But due to several soft pre-NFP leading indicators released throughout this week, you can almost sense that the market is bracing itself for disappointment. Read our NFP preview HERE. If our fears are realised then the probability of a 25bps rate cut at the October 30 FOMC meeting may rise near the 100% level, which would could see the greenback break further support levels.
  • Among commodities, gold was continuing to shine brightly in these turbulent times due, among other things, to higher demand for haven assets. Also supporting the precious metal is a falling US dollar and rising bond prices (or put another way, falling yields – this is boosting the appeal of noninterest-bearing assets like gold and silver). Meanwhile, crude prices struggled to recover further ground after its kick-back rally along with stocks yesterday. Oil has been hit by a double whammy of bearish news this week. The fact that Saudi has managed to restore its production back to original capacity after those attacks on its infrastructure by Houthi rebels (which Saudi and the US claimed were backed by Iran) sooner than expected means investors have had to price out raised supply risks at a faster clip than would have otherwise been the case. On top of this, we had a handful of soft global macro data – particularly from the US manufacturing sector – which has raised fears that oil demand might not grow as fast as it had been expected. But now that some of these factors have been priced in, oil prices may fall less sharply going forward or at best start to form a base.

  • Stocks were struggling again in Europe after yesterday’s short-covering bounce. It remains to be seen how the markets will end tonight after what has been a turbulent week so far. Will an unexpectedly good US employment report be enough to lift sentiment? Will opportunistic investors step in, hoping that the upcoming US-China trade talks will result in a breakthrough? Or will investors use this opportunity to close out their positions that were previously in deeper losses? We reckon that if the employment report is a poor one, then stocks may fall into the close – for the markets have responded negatively (for a change) to bad data so far in the week, suggesting investors feel that monetary policy alone is no longer enough to support stocks at these extremely elevated levels.


Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.