LGT Navigator

Stock markets strong as US jobs report signals weakening labour market

The strong global stock rally continued through last week’s final trading session and into the new week after US labour market data released Friday showed the job market cooling. A weaker labour market gives the Federal Reserve (Fed) room to leave interest rates unchanged again at its last policy meeting of the year in December. Investors are not only increasingly expecting the Fed to be done with the current interest rate hiking cycle, but they are also pulling forward their expectations for when the Fed will begin cutting rates.

Shane Strowmatt, LGT
Tempo di lettura
5 minuto
US labour market report newspaper

US nonfarm payrolls were up 150,000 in October, a lower number than analysts had expected. At the same time, the unemployment rate increased to 3.9%, an almost two-year high, while the pace of wage increases decelerated to 0.2% on the month or 4.1% from a year earlier. That’s the smallest increase of wages on an annual basis in more than 2 years. Many analysts interpreted the soft labour market data to mean that Fed could hold rates at the current 22-year high for a third consecutive meeting in December.

Stock indices advanced after the US Bureau of Labor Statistics report, while US Treasury bounced back a bit, and the dollar slipped to finish the week. Not only the cooling of the labour market, but also poor services sector activity was supporting the thesis that the Fed has reached peak yields. The Institute for Supply Management’s Services Purchasing Managers’ Index (PMI) fell 1.8 points to 51.8 last month, its fastest monthly fall since March. The Dow Jones Industrial was up 0.7% and the S&P 500 gained 0.9%, its fifth straight day of gains. The Nasdaq-100 shot up 1.2% despite a negative drag from Apple, which lost 0.5% due to its negative outlook for the current quarter.

In individual stocks, shares of A.P. Moller-Maersk fell by almost 17% after the Copenhagen-based transport company said it will cut at least 10,000 jobs and said the shipping industry is likely to remain weak in the coming years.

In the Asia-Pacific region, stock markets continued to rally on Monday. South Korean stocks led gains in the region, with the Kospi surging 4.5% after short-selling was banned in the country until the end of the second quarter of 2024. Trading in Tokyo resumed after a long holiday weekend with the Nikkei 225 jumping 2.3% to start the new week. In Australia, the S&P/ASX 200 closed up 0.3%. Hong Kong's Hang Seng Index gained 1.5% and the Shanghai Composite was trading 0.8% higher.

Corporate news in focus: Quarterly figures from Ryanair and Biontech.

Economic data in focus: German industrial orders (08:00 CET), Switzerland’s KOF Employment Indicator (09:00), Italian Services PMI (09:45).


LGT helps you make informed investment decisions

All about global economic and market trends at a glance

You can also follow us on Facebook or LinkedIn – or visit Insights and discover interesting background articles. If you have questions, a consultant from the bank will be happy to help you.

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