Summary:
-
US stock close to 1-month highs
-
Market looks through NFP miss; Wages beat
-
Powell speech due at 5:30 (BST)
The price action for US stocks this week has been pleasing for bulls with a soft start after another gap lower over the weekend marking the low for the week and the highest level being printed in the past hour. This sort of move is in keeping with the kind of thing you’d normally see in bull markets with weakness to start out and ending on or near the highs. Should the market manage to finish today around current levels or higher then a large bullish weekly candle will have been printed and the outlook for further gains going forward would become more favourable.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile app
The market reaction to the NFP release has been typically volatile, but lacking a clear direction at the time of writing just over 45 minutes later. Source: xStation
The main economic release of the month has come out in the past hour with with the eagerly awaited US jobs report coming in a little on the soft side. The non-farm employment change was 130k against a consensus forecast of 163k while the prior was revised lower to 159k from 164k originally. This means the net two month revision is -20k. While the headline is something of a disappointment there was better news to be found in the wage figures with a 3.2% Y/Y rise in average hourly earnings above the 3.0% expected.
A strong ADP print earlier this week was a bit of a red herring when it came to today’s release with the NFP coming in worse than forecast and at its 3rd lowest level this year. Source: XTB Macrobond
The question for investors now is whether bad news is actually good for stocks as it could well weigh on the decision makers at the Fed and lead to a more accommodative monetary policy going forward. There’s not been a clear market reaction in the S&P500, but the failure to sell-off is perhaps telling after what is, all things considered, a soft data point. Further insight into how the Fed see the future policy path may be revealed later when chairman Powell delivers a speech in Zurich. Before today’s data the market was already assigning a high probability to 3 further 25 basis point cuts this year, but the chances of a 50 bps move, while still unlikely will probably tick higher after this release.
The S&P500 is on course for a second solid weekly gain in a row. The market is now up around 170 points from last week’s low and resides less than 2% from the all-time high at 3029. Source: xStation
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
