Markets Drive Higher After Jobs Data Miss – Nasdaq up 1.4%
US Stocks once again jumped higher on Friday after employment data confirmed a slowing in the economy leading to higher hopes that the Fed has finished hiking rates. The Nasdaq led the way higher, finishing up 1.38% on the day, followed by the S&P, up 0.94% and the Dow which added 0.66%. The dollar took another tumble, trading down to a six-week low as US treasury yields fell back again, the benchmark 10-year dropping to a five-week low dipping under 4.5% and the 2-year trading down to 4.8%. Oil fell lower again in line with the dollar appreciation, WTI finding a base just above the $80 level and Brent just under $86, Gold however remained bid revisiting levels north of $2,000/oz before dropping back down after the data.
Crucial Week Ahead for US Investor Sentiment
It is a crucial trading week ahead for investors as they continue to assess the impact of last week’s Federal Reserve meeting and the weaker jobs numbers from the states. Market sentiment is swinging strongly in line with Fed rate hike expectations, and we saw big moves in stocks, treasury yields and the dollar last week as the market started to price in a much lower possibility of another rate hike in this cycle. Essentially, we have the market rallying on weaker data which makes sense if we are to get the much vaulted ‘soft landing’ in the states, however this is where the balancing act for the Fed comes in and if we see a change in this status and either, data falls more rapidly or inflation remains resilient, then we could see this correlation break down swiftly and a deeper correction in stocks.
Quiet Data Day to Start the Week
It is a relatively quiet start to the week in terms of data releases today although markets will still be adjusting to the latest employment numbers out of the US for the first couple of sessions. The Asian trading day will see initial investor focus on Japan as BOJ Governor Kazuo Ueda is scheduled to give us the banks latest views in a press conference – Yen traders will be expecting plenty of volatility around the event. The European session see’s the latest UK Construction PMI numbers out with expectation of a 46.1 print and there is a raft of Services PMI data due out from the continent, although not as impactful as the headline Flash numbers. It’s a similar story in the New York day with just the Canadian Ivery PMI number set to attract attention, but once again expect to see volatility in line with market sentiment as investors react to the data from last week.
