Wall Street listless ahead of two days of US employment data.
The markets appeared to be slow in their progress in the early hours of Thursday ahead of further jobs data likely to show continued growth within the U.S. labor market.
The futures of the Dow Jones industrials and the S&P 500 shifted between small gains and losses prior to the bell rang at the start of the day.
It is expected that the U.S. government will release its weekly unemployment report on Thursday, and its highly-anticipated December jobs report on Friday. Employment numbers that are strong are seen as an indicator of rising inflation pressures, which could lead to the further rate of interest increases being made through the Federal Reserve.
This week, the federal government announced the U.S. job openings slipped in November, but they remained at a high range, suggesting that companies are determined to recruit more employees. There are 1.8 jobs per unemployment rate, while prior to the outbreak there was usually more unemployment than job openings.
In an effort to keep the economy cool as well as slow the growth of jobs, the Fed increased its benchmark short-term interest rate in the month of October for the 7th time since 2022, and indicated that it would increase rates in the future. The rate was lower than the ones from the previous four meetings, which is a reflection of the fact that inflation, although still quite high, is slowing down.
Minutes of its mid-December meeting that were released Wednesday demonstrate that Fed officials were determined to maintain rates at a high level and were not content with the drop in inflation that took place from a high of 9.1 per cent in June, to 7.1 percent in November.
The benchmark rate of lending by the Fed is set at 4.25 percent to 4.5 percent, an increase from close to zero after seven increases in the last year. The Fed has predicted that the rate could reach the range of between 5% and 5.25 percent in 2023, and isn’t suggesting a reduction in the rate in 2024.
While there is no doubt that the U.S. labor market remains solid, job losses have increased in the tech sector, which is struggling with declining demand as rising inflation eats into homeowners and businesses.
The news came out on Wednesday. Amazon revealed that it was laying off 18,000 people as well as the software company Salesforce which is the proprietor of Slack has announced it is cutting about 8000 jobs. Facebook’s parent company Meta, Twitter, Doordash and other companies have announced layoffs in the past few months too.
US STOCK-FUTURES muted as Fed minutes signal tightening in the coming months
In Europe the UK’s FTSE 100 rose 0.6% and France’s CAC 40 gained 0.1 percent and Germany’s DAX was unaffected.
Global shares rise as sentiments get boost from Fed, US jobs https://t.co/fjCy4Y0ntJ
— Daily Freeman (@DailyFreeman) January 5, 2023
In Asia fears about China’s slowdown in economic growth were weighing on the regional mood.
Japan’s benchmark Nikkei 225 rose 0.4% to finish at 25,820.80. The S&P/ASX 200 in Australia climbed almost 0.1 percent to 7,063.60. South Korea’s Kospi increased 0.4 percent to 2,264.65. Hong Ko’s Hang Seng jumped 1.3% to 21,052.17 The Shanghai Composite gained 1.0% to 3,155.22.
India’s Sensex decreased by one percent.
The widespread COVID-19 cases that have been reported in China are adding to the anxiety over a long-term decline in the country’s property market as well as concern over the consequences of the restrictions on the spread of the virus that were recently relaxed since the virus spread in the largest outbreak nationwide to date.
“Retail sales in general should be weaker in December compared to the prior month,” said Robert Carnell, regional head of research Asia-Pacific at ING. The analyst said that the demand may rebound over this Lunar New Year later in the month.
“After this long weekend, there might be more COVID daily cases, before a slow month for retailers. The road to recovery might not be easy for retailers.” the expert said.
Investors have been keeping their sights set on the Japanese yen since investors do not expect Japan’s low rates to stay the same even though rates are increasing in other countries.
“Even though the BoJ has warned that this does not mean the rate hike is likely, however, the BoJ will not be in a position to keep rates at zero when rates are rising elsewhere. In the near future it is likely that the BoJ will increase rates and it’s enough to cause traders to invest in the yen. It was the worst-performing major currency in the past year.” stated Ipek Ozkardeskaya who is a Senior analyst with Swissquote Bank.
In exchange for currency The U.S. dollar rose slightly to 132.69 Japanese yen from 132.56 Japanese yen. Euro cost $1.0608.
In energy trading, the benchmark U.S. crude rose $1.42 to $74.26 per barrel during trade on electronic platforms like the New York Mercantile Exchange. The price dropped $4.09 on Wednesday. Brent crude, the world’s price standard, climbed $1.55 to $79.39 for a barrel.
On Wall Street Wednesday, the S&P 500 increased by 0.8 percent, while the Dow Jones Industrial Average advanced 0.4 percent. The Nasdaq composite gained 0.7 percent, as did the Russell 2000 index gained 1.2 0.1%.
