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Stock markets under pressure ahead of US labour market report

The labour market in the US remains one of the important pieces of the puzzle in the monetary policy of the Federal Reserve. Indeed, low unemployment relative to the overall economic situation is creating additional inflationary pressure through rising wages. On Wall Street, interest rate fears and the collapse of the crypto bank Silvergate Capital caused uncertainty and falling prices. Meanwhile, Japan's central bank announced that it would stick to its extremely loose monetary for the time being. 

Date
Mots
Alessandro Fezzi, LGT
Temps de lecture
5 minutes
US labour market report newspaper

The Dow Jones Industrial declined by 1.66% to 32’254.86 points, trading at the level of early November last year. The S&P 500 closed at 3’918.32 points, 1.85% lower than the previous day. On the Nasdaq, the indices fell by 1.8%. This afternoon, data on the US labour market will be released. Economists expect on average a much slower job growth in February. The consensus forecast for new jobs created (excluding the farm sector) is 205’000, well below the 443’000 jobs reported for January. The unemployment rate is expected to remain unchanged at a low level of 3.4%. In addition, the news of the collapse of the crypto-bank Silvergate Capital caused nervousness. As a result, stocks of US banks also came under pressure. A slight decline in the yield on ten-year US government securities to 3.91% provided some tailwind. 

On Asia's stock markets, the price slide continued. In Hong Kong, the Hang Seng Index fell 2.2%, leading the region's losses. In mainland China, the Shenzhen Component lost 0.6% and the Shanghai Composite fell around 1%. In Tokyo, the Nikkei 225 was trading 1.7% lower. Meanwhile, the Bank of Japan kept its extremely loose monetary policy unchanged. It was the last meeting under outgoing Governor Haruhiko Kuroda, whose term ends after a decade. The BoJ is thus keeping short-term interest rates at -0.1% and long-term rates at around zero. The yen weakened sharply against the US dollar in response. 

The European Central Bank (ECB) should continue to take decisive action against high inflation, according to Council member Francois Villeroy de Galhau. The French central bank chief expects the ECB's inflation target to be reached by the end of 2024 or early 2025. Pushing the inflation rate in the eurozone - currently at 8.5% - down to the central bank's target of 2% is "a commitment and not just a forecast," the central banker stressed. 

Corporate news in focus today: Daimler Truck with its annual figures.

Economic data today in focus: German consumer prices February (08:00 CET) and US labour market report (14:30). In addition, ECB President Lagarde will speak (16:00).

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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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