Markets Drift Ahead of Employment Data – Dow Down 0.4%
US markets edged lower yesterday as investors awaited key employment data due today while keeping a close eye on developments in the Middle East. The Dow dropped 0.44%, the S&P 500 lost 0.17%, and the Nasdaq fell slightly by 0.04%. Stronger-than-expected US Services PMI data pushed both bond yields and the dollar higher, with the 2-year yield climbing 5.7 basis points to 3.705%, and the 10-year yield rising by 5.3 basis points to 3.841%. The DXY index also gained 0.33%, closing at 101.98.
Oil was the standout performer of the day, with prices surging as markets began to factor in supply threats stemming from the Middle East conflict. Brent crude soared 5.03%, closing at $77.62, while WTI jumped 5.15% to $73.71 per barrel. Gold traded within a narrow range but ultimately edged down by 0.08%, finishing at $2,659.32.
Employment Data Expected to Drive Market Volatility
We could see heightened market volatility today as traders continue to follow developments in the Middle East while bracing for the release of US employment data. Both factors have significant potential to shake the markets, and given the current climate, either one, or both, could trigger substantial movements across various financial instruments. Safe-haven assets are likely to dominate if the Middle East conflict escalates, but further market shifts may come from US labour data. The Federal Reserve has made it clear that its focus has shifted towards the jobs market in recent months, moving away from inflation data. As a result, today’s employment figures are under even greater scrutiny, and any deviation from the expected 147,000 jobs increase could lead to sharp market reactions.
Non-Farm Payrolls in Focus Today
Traders are preparing for a busy Friday, with the key US employment data set to be released early in the New York session. The Asian session offers little in terms of significant economic releases, though market participants still anticipate some volatility as geopolitical risks continue to be priced in. In the London session, early attention will be on the UK’s Construction PMI data, expected to print at 53.1, but the main focus will undoubtedly be on the US figures. Analysts are forecasting a 147,000 increase in Non-Farm Payrolls (NFP), with the unemployment rate holding steady at 4.2%, and Average Hourly Earnings expected to rise by 0.3% month-on-month. Any deviation from these forecasts could lead to significant market movements heading into the weekend.
