Market News & Analysis
Market Brief: Payrolls, no problem
Ken Odeluga January 10, 2020 9:24 PM
Stock market snapshot as of [10/1/2020 1:12 PM]
- Global stock markets are on pace for a fourth consecutive day of gains. The insouciant attitude is even more remarkable as it comes ahead of Friday’s monthly payrolls, data which frequently stoke hypersensitive trepidation. The risk of volatility linked to U.S. employment surprise exists. However, as our Head of Research Matt Weller points out here, “even an outlier NFP reading for a single month is unlikely to meaningfully impact Fed policy, and by extension, market pricing.”
- Consensus forecasts point to payrolls easing from the extraordinary bump up to 266,000 in November to 162,000 in December. That would still be a print consistent with a solid labour market. Yet it would not cause a ripple on the surface of policymaking considerations. Likewise, expectations for 0.3% month-to-month wage growth, as per long-term run rate, would also be neutral. This probable heads-we-win, tails-we-win scenario helps explain the return to what looks like complacent sentiment on risky assets
- Having stepped back from the brink, Tehran and Washington appear to be staying back. Iran dismissed the notion that the Boeing 737 that crashed in a fire ball soon after the Islamic Republic began striking U.S. airbases in Iraq could have been shot down. Canada, the U.K. and Australia say the claim is backed by intelligence. Such an event was “not possible”, Tehran said, calling the allegations “psychological warfare”. The U.S. and Canada are among countries Iran has invited to aid investigations though. And Canada’s PM Justin Trudeau noted the aeroplane’s downing “may well have been unintentional.” This signal and the generally co-operative attitude amongst countries involved tends to neutralise, for now, yet another incendiary aspect of an extraordinary week
- Meanwhile, Federal Reserve Vice Chairman Richard Clarida characterised the U.S. economy as in a “good place”. Hours earlier, Beijing confirmed that Vice Premier Liu He will lead a delegation to Washington to sign the phase one trade deal between 13th-15th January
Stocks/sectors on the move
- It’s never the best sign when European utilities – supposedly a ‘bond-proxy’ sector top the STOXX sectors. Still, the main driver on Friday was comments from the CEO of Italy’s power group Enel. The stock traded 1.8% a while ago. “In most of the countries in which we operate, there is no longer any need for subsidies,” Antonio Cammisecra said, noting Enel can increasingly fund renewable projects by wholesale electricity deals
- Energy stocks as the second-best performing industry segment was more in keeping with the prevailing mood. A bullish JPMorgan note on European Energy shares played a part
- Boeing stock’s uplift in the prior session amid grim exoneration over the downed 737 faces some pullback. It disclosed staff comments to regulators investigating the plan maker’s beleaguered 737 Max model. The plane was “designed by clowns” who in turn were “supervised by monkeys”, according to one Boeing pilot. The stock was 0.5% lower in pre-market deals
FX snapshot as of [10/1/2020 1:12 PM]
View our guide on how to interpret the FX Dashboard
- A firm dollar backs the relaxed view around data, with EUR/USD having touched its 50-day average of 1.019, which provided some support
- All G10 majors eased vs. the greenback, though the yen’s massive vault earlier in the week meant that it continued to repay the heaviest toll, albeit lightly on Friday. USD/JPY is set to gain at least 1.4% this week
- Aussie keeps climbing and is one of the few to keep the dollar at bay as it retraces some of the late-2019 collapse. Australian retail data was the latest stimulus
Upcoming economic highlights
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.
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.