Amid the anticipation of the upcoming US labour report, U.S. equities experienced a modest pullback in an undulating session. The most recent data revealed a marginal uptick in Americans filing for unemployment benefits, even as layoffs hit an 11-month nadir in July, underscoring the current tight labour conditions.
Divergent signals are emanating from employment statistics, likely pointing to the prevalent labour supply constraint. Despite these fluctuations, the demand for labour—predominantly in the service sector—holds strong but shows signs of gradual abatement.
July witnessed a deceleration in the growth of the US services sector, largely attributed to a dip in new orders, as per the Institute for Supply Management’s PMI. It retreated to 52.7, down from June’s 53.9, albeit beating the consensus pegged at 53. S&P Global’s PMI gauge echoed this sentiment, recording a decline to 52.3 in July from 54.4 in June.
The stock market felt the tremors of this data with the Dow, S&P 500, and Nasdaq registering minor losses of around 0.2%, 0.25%, and 0.1% respectively.
On the currency front, the Dollar retreated from a four-week zenith, a reaction to the lukewarm labour market figures, ahead of the impending non-farm payrolls report. Concurrently, the Sterling took a hit post the Bank of England’s modest 25-basis point rate increment, placing GBP/USD at 1.27, marking a 0.07% decline. Elsewhere, after the ECB hinted at a pause in its September meeting amidst waning inflation and growth, the EUR/USD experienced a 0.04% ascent, reaching 1.094.
Amid speculations around the Bank of Japan’s monetary policy trajectory, USD/JPY weakened by 0.40% to 142.72, after touching a four-week pinnacle at 143.89.
In the commodities arena, the West Texas Intermediate (WTI) crude witnessed a 2.6% surge, settling at $81.55 per barrel, following Saudi Arabia’s announcement to prolong its production cut. Brent crude, the global benchmark, followed suit, closing up at $85.08. This decision aligns with the EIA’s revelation of a 17-million-barrel dip in US oil inventories and precedes the OPEC+ rendezvous.
Precious metals grappled with downward pressure. A cloud of uncertainty loomed due to Fitch’s unexpected downgrade of the U.S. government’s credit rating, attributed to heightened partisan tensions amongst legislators and disputes over the U.S. debt ceiling. Gold and silver saw reductions of 0.3% and 0.8%, respectively.
The digital currency landscape presented a mixed bag, with Bitcoin (BTC/USD) maintaining its stance above the $29,000 threshold, while Ethereum (ETH/USD) witnessed a marginal 0.1% uptick after a volatile trading day.
Global Markets in Flux Amid Economic Data and Central Bank Moves
October 4, 2023
