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US jobs report to provide fresh clues

The monthly employment report from the US will be in focus today. After stronger-than-expected employment growth in November, a slowdown is expected at the end of last year. Financial markets will be watching the data closely for clues on the Federal Reserve's future monetary policy. Recently, hopes of an imminent turnaround in interest rates had faded, putting pressure on the stock market at the beginning of the year, particularly on technology stocks.

Alessandro Fezzi, LGT
Reading time
5 minutes
US labour market report newspaper

Sentiment in the US equity markets remained subdued on Thursday, with technology stocks remaining under pressure. The Nasdaq indices lost around 0.5%. The Dow Jones Industrial did not budge and closed virtually unchanged from the previous day at 37,440.34 (+0.03%). The S&P 500, on the other hand, fell by 0.34% to 4,688.68. In the bond market, the yield on ten-year US Treasuries has now climbed above the 4% mark and is currently at 4.02%. The focus now turns to the US labour market, which is expected this afternoon.

Yesterday's ADP private sector payrolls report was stronger than expected. In December, 164,000 jobs were created, more than forecast (consensus 125,000). According to ADP, US companies are continuing to hire at a healthy pace and wages are also rising. If the labour market remains robust, this will support wage growth and push up prices, making the fight against inflation more difficult. This makes labour market developments a key factor for the Fed in setting monetary policy.

Asia-Pacific markets were mixed on Friday after falling in the first few trading days of the new year, with most markets ending the first week of the year with losses. The Hang Seng was down 0.4% today, while the Chinese CSI 300 was flat. In Australia, the S&P/ASX 200 closed slightly lower today, losing 1.3% for the week. Tokyo's Nikkei 225 ended the week up just under 0.5%, while South Korea's Kospi lost around 0.5%. Most Asian markets were down for the week, with Hong Kong's Hang Seng Index down 2.8% and South Korea's Kospi down more than 3%.

In the eurozone, sentiment among services firms was unchanged at the end of June, but continued to point to a contraction in activity. The S&P Global Purchasing Managers' Index remained at 47.6 points in December, while a preliminary analysis of the monthly survey had forecast a decline to 47.0.

British service providers were slightly more optimistic at the end of last year. The purchasing managers' survey for the services sector improved sharply from 50.9 to 53.4 points, signalling a clear expansion. On average, economists had expected a more moderate improvement to 52.7 points.

Corporate news in focus: Sodexo Q1 sales, Constellation Brands Q3 figures.

Economic data in focus: Germany November Retail Sales (08:00), Switzerland November Retail Sales (08:30), Austria December Consumer Prices (09:00), Eurozone December Consumer Prices (11:00), Italy Consumer Prices (11:00), US December Employment Situation and November Trade Balance (14:30), ISM December Manufacturing PMI, Durable Goods Orders November (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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