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US job openings jump unexpectedly

The resilience of the US labour market surprised investors again with job openings increasing unexpectedly at the end of the summer. Stock and bond losses deepened after the release of the data on Tuesday as fears spread that a solid US labour market could give the Federal Reserve room to increase rates further or leave them high for longer.

Shane Strowmatt, LGT
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A total 9.61 million jobs were available in the US in August, up from 8.92 in the previous month, according to the Bureau of Labor Statistics’ JOLTS report. Layoffs stayed low in August, while hiring increased. The positive labour market data came as a surprise to most market participants. This year, the US labour market has regularly surprised to the upside, showing resilience despite the fastest interest rate hiking cycle by the Federal Reserve in decades.

The yield on the 30-year US Treasury increased to its highest level since 2007 on Tuesday, surpassing its 2010 high. The yield on ten-year Treasuries passed 4.85% this week, moving in on the 5%-mark, which hasn’t been breached since 2007. Concerns about the sell-off in bonds and prospects of higher rates caused stock indices in New York to slide further, ending the day deep in the red. The Dow Jones Industrial lost 1.3% and the S&P 500 ended Tuesday’s session down 1.4%. The tech-heavy Nasdaq-100 took the biggest losses, finishing the day 1.8% lower.

Adding to uncertainty in the US was the ousting of Kevin McCarthy as speaker of the house. It was the first time in history that the US House of Representatives removed the leader of the legislative body, and an interim speaker was appointed immediately afterwards.

The weak sentiment from Wall Street spilled over to the Asia-Pacific region on Wednesday, with major stock indices there losing ground. The Nikkei dropped 1.8%, hitting the lowest level since May during the trading session. South Korea’s Kospi led regional losses, down 2.3%. In Australia, the S&P/ASX 200 was trading 0.8% lower. Hong Kong's Hang Seng Index fell 1.1%, extending losses from a 3% slide on Tuesday. Market’s in mainland China are closed for a holiday week.

In Switzerland, prices continued to fall with the Consumer Price Index (CPI) decreasing in September by 0.1% when compared with the previous month. The annual inflation rate was 1.7%, once again below the Swiss National Bank’s (SNB) target of 2% inflation. As a result of the decelerating rate of inflation in Switzerland, the SNB kept rates unchanged, despite market expectations for a further hike.

Corporate news in focus: Exxon Mobil Q3 figures.

Economic data in focus: Services Purchasing Managers’ Indices from several countries throughout the day, Italian gross domestic product (10:00 CET), European Central Bank President Christine Lagarde holds a pre-recorded welcome address at a monetary policy event in Frankfurt (10:15), euro area retail sales (11:00), US ADP National Employment Report (14:15), US ISM Services PMI (16:00), ECB President Lagarde speaks at Columbia University in New York (18:00).


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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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