Initial jobless claims in the US decreased by 14,000 to 385,000. The number of layoffs fell to its lowest level in more than 21 years. It indicates that companies are holding on to their workers by any possible means amid a labor shortage. Today, the investors’ attention will be focused on the Nonfarm Payrolls data and the unemployment rate in the USA. The good labor data might raise concerns that the Fed will start cutting its QE program soon. Negative labor market data will cause questions about the economic recovery but will add confidence that the soft monetary policy will remain unchanged. The S&P 500 and Nasdaq indices closed at record highs on Thursday as optimism over strong corporate reporting, as well as progress on the infrastructure bill and expectations for a strong monthly jobs report on Friday, supported investor sentiment. 340 companies in the S&P 500 index have already reported for the past quarter. 87.6% improved their earnings estimates. The White House considers the option to oblige foreigners to vaccinate from COVID-19 before traveling to the United States.
European stock indices mostly increased on Thursday. Germany’s DAX added 0.33%, France’s CAC 40 jumped by 0.52%, but the British FTSE 100 decreased by 0.05%. The Bank of England expectedly kept interest rates unchanged but indicated that some moderate tightening of monetary policy would likely take place shortly to keep inflation under control. The Bank’s inflation forecast is 4% by the end of the year, but the period of high inflation will be temporary. Economists expect the first UK interest rate hike next year, which means the Bank of England will begin to normalize monetary policy faster than the European Central Bank and the US Federal Reserve.
Oil prices increased by more than 1% yesterday. The situation in the oil market remains uncertain. On the one hand, OPEC+ countries are increasing oil production now to meet demand. On the other hand, the spread of the Delta strain is putting pressure on oil price growth. The third factor is tensions in the Middle East, which contributes to the increase in fuel prices. Analysts believe that oil will strive for $85 per barrel shortly.
Good macroeconomic data supports the dollar index, which leads to growth of US Treasury bond yields and a drop in prices of gold and other precious metals (inverse correlation). But fundamentally, soft monetary policy always contributes to the rise in prices for precious metals.
Asian stock indices are traded without a single dynamics and can’t follow the rising US indices. Only Japan’s Nikkei index increased by 0.11% due to the growth in shares of such companies as Fujikura (+15.6%), Nikon Corp. (+8.9%), and Konami Holdings Corp. (+7.4%). The spread of Delta continues to strengthen concerns about a rapid economic recovery in Asia. Thailand, Malaysia, and Australia (Sydney) reported record daily cases of the disease on Thursday. China is imposing new travel and movement restrictions across the country, including in Beijing, as the outbreak caused by Delta has grown to more than 500 cases within the past 2 weeks. It should be noted that 61% of China’s adult population is vaccinated.
Main market quotes:
- S&P 500 (F) 4,429.10 +26.44 (+0.60%)
- Dow Jones 35,064.25 +271.58 (+0.78%)
- DAX 15,744.67 +52.54 (+0.33%)
- FTSE 100 7,120.43 -3.43 (-0.05%)
- USD Index 92.27 0.00 (0.00%)
Important events for today:
- Australia RBA Governor Philip Lowe’s Speech at 02:00 (GMT+3);
- Australia RBA Monetary Policy Statement (m/m) at 04:30 (GMT+3);
- UK BoE MPC Member Broadbent’s Speech at 14:15 (GMT+3);
- US Nonfarm Payrolls (m/m) at 15:30 (GMT+3);
- US Unemployment Rate (m/m) at 15:30 (GMT+3);
- Canada Unemployment Rate (m/m) at 15:30 (GMT+3);
- Canada Ivey PMI (m/m) at 17:00 (GMT+3).
