Wall Street faced a downturn on Wednesday, reflecting global market uncertainties and unexpected shifts in key economic indicators.
Top 3 Key Points:
- 📉 Subdued Job Growth: ADP National Employment Report revealed private employment gains of 103,000 in November, falling short of the anticipated 130,000.
- 🌍 Trade Deficit Widens: The US trade deficit expanded by 5.1% to $64.26 billion in October, slightly above consensus estimates.
- 💹 Mixed Movements in Yields and Forex: The US 10-year yield dipped, the Dollar reached a two-week high, and the ECB faces pressure to cut rates.
Wall Street concluded Wednesday’s trading session on a bearish note, as investors grappled with a set of economic data that fell short of expectations. The private sector’s employment growth, as reported by Automatic Data Processing (ADP), rose by a modest 103,000 in November, not meeting the projected figure of 130,000. This marked a slight downward revision from October’s job gains, originally reported as 113,000.
The US Bureau of Labor Statistics has its eyes set on releasing the non-farm payrolls report, with an anticipated growth of 187,000 for November. If realized, this would represent an improvement from the previous month’s 150,000 increase.
In another sector, the US goods and services trade deficit witnessed a 5.1% increase to $64.26 billion in October, as disclosed by the Census Bureau and the Bureau of Economic Analysis. This figure slightly exceeded the consensus forecast of $64.2 billion.
Stock market indices echoed the subdued economic sentiment. The Nasdaq Composite declined by 0.6% to 14,146.7, the S&P 500 lost 0.4% to 4,549.3, and the Dow Jones Industrial Average experienced a 0.2% decrease to 36,054.4.
Interest rates displayed mixed trends, with the US 10-year yield falling five basis points to 4.12%, and the two-year yield inching up 2.2 basis points to 4.60%.
In the foreign exchange arena, the Dollar maintained its strength, reaching a two-week high. The EUR/USD pair weakened amid growing expectations that the European Central Bank (ECB) might initiate interest rate cuts as early as March 2023. The Dollar Index was up 0.19% at 104.16, while the EUR/USD was down 0.29% at 1.0764.
The ECB is scheduled to announce its interest rate decision next Thursday, with predictions pointing towards maintaining the current 4% rate. Similarly, the Federal Reserve and the Bank of England are expected to keep rates steady in their upcoming meetings.
The Bank of Canada (BoC) maintained its key overnight rate at 5%, differentiating itself from its peers by signaling the possibility of further rate hikes, given its ongoing concerns about inflation.
In the currency markets, the USD/JPY pair rose 0.15% to 147.38, while the AUD/USD saw a minor decline of 0.02% to 0.65495.
Commodity markets had their share of fluctuations. West Texas Intermediate (WTI) crude oil fell 4.2% to $69.28 per barrel, amid skepticism about the full implementation of supply cuts by OPEC+. Gold edged up 0.4% to $2,044.70/oz, while silver dropped 1.1% to $24.28/oz.
The cryptocurrency sector saw Bitcoin (BTC/USD) slightly easing by 0.06% to $44,049, hovering near its highest level since April 2022. BTC’s performance this year, marked by a 150% gain, has been partially fueled by optimism over potential U.S. regulatory approvals for exchange-traded spot BTC ETFs.
