US jobless claims data beats expectations – but Wall Street struggles

Global stock markets are struggling around or below opening levels today despite an improvement in US jobless data.

The Dow has crept higher, while the Nasdaq has eked out a new intraday high before trimming gains. The S&P 500, which is now under 2% away from February’s all-time high, is trading marginally lower.

Jobless claims drop, but the overall picture remains bleak

Markets are little cheered by the latest labour market data, with investors instead awaiting any news of progress as lawmakers continue to argue over a new stimulus bill. The proximity of tomorrow’s nonfarm payrolls report is also keeping markets soft.

This is despite initial weekly jobless claims printing at 1.186 million – well below the 1.415 million expected by analysts and also the lowest reading since the pandemic sent claims jumping by nearly 7 million at the end of March.

Continuing claims – which counts those claiming benefits for two or more consecutive weeks – have dropped from 16.95 million to 16.10 million, again below forecasts.

While this points to improving labour market conditions, the bigger picture remains bleak. This is the 20th straight week that the US has registered more than a million new weekly claims. 31 million Americans remain unemployed.

The figures have further complicated the outlook for the labour market, which had been showing signs of weakening again. Yesterday’s ADP private payrolls report showed jobs growth of just 167,000 compared to expectations of over 1 million.

Nonfarm payrolls in focus – is the jobs recovery under threat?

The latest numbers will put tomorrow’s nonfarm payrolls report under even greater scrutiny, as markets look for more clarity over the direction of the labour market.

Economists expect payrolls grew by 1.6 million, which represents a sharp slowdown in jobs gains after payrolls jumped 2.7 million in May and 4.8 million in June. However, payrolls returned to growth more quickly than expected.

President Donald Trump has promised “big jobs numbers are coming on Friday”.

Stocks steady as pubs prepare to reopen

European stocks were steady near the flatline on a quiet Friday session with the US market closed for the Independence Day holiday. Stocks rallied in the prior session after a bumper US jobs report showed 4.8m jobs were created in June.

Despite this, as detailed yesterday, the unemployment rate remains very high at more than 11%, the more up-to-date weekly initial and continuing claims numbers are not improving quickly enough, and the recent spike in cases means several states are re-imposing lockdown restrictions, which will hamper jobs growth in July.

Risk assets gained more support as the Chinese services PMI rose to a 10-year high at 58.4 – the usual caveats about diffusion indices apply, as to the usual caveats about any data out of China, but it’s solidly encouraging for markets.  Australian retail sales bounced back almost 17%. The number of cases in the US continue to surge – more than 55k in a single day the latest total, with the governor of Texas now mandating the wearing of facemasks.

Major indices continue to track around the middle of the June range, though thanks to a decent run this week are now moving towards the upper end of the range having tapped the lower end last week. The S&P 500 cleared the 61.8% retracement yesterday but closed well off its highs, while the Dow is struggling to hold the 50% level.

In Europe the FTSE 100 is holding above the 50% level, while the DAX is facing resistance today at the 78.6% level. After a strong week and with the US shut, it might be a quiet session today. Scratch that – with pubs about to reopen and with every trader planning their weekend engagements, it will be a very quiet one in London.

UK government eases quarantine rules for travellers

Anyone arriving in England from a number of countries including Spain, France, Germany and Italy won’t need to self-isolate from July 10th, whilst the government is also easing international travel restrictions. A full list of countries that people can arrive from without self-quarantining will be published today.

Relaxing the draconian quarantine rules and allowing more ‘non-essential’ travel should come as a shot in the arm for many beaten up travel & leisure stocks, but there’s a long way to go to restore confidence and get people travelling as much as they did last year. It will take years to get air passenger numbers back to 2019 levels.

Pub and restaurant stocks have taken a beating during the pandemic, but investors may be able to raise a glass come Saturday as the various inns and hostelries reopen because share prices have recovered remarkably well. Marston’s has risen threefold from its March low, while JD Wetherspoon and Mitchells & Butlers have both more than doubled in that time. Mine’s a quadruple whisky.

Oil (WTI-Aug) drifted higher to the top of the Jun 8th peak around $40.70 where it’s pulled back to the $40 round number. The move higher has been steadily losing momentum and failure at the $40.70 area suggests perhaps the progression of the double top into a head and shoulders reversal pattern.

GBPUSD hits resistance, EURUSD bullish flag nears completion

In FX, the pound’s bounce ran out of steam and the euro has come back to its anchor. GBPUSD rallied strongly out of the channel but hit resistance at 1.2520 and has consolidated in a very narrow range around 1.2470. As markets opened in Europe the pair slipped this range and started a move lower – it could retrace towards the round number support at 1.24.

Meanwhile EURUSD has come back to 1.1230, the anchor point for the whole of June. This is the 23.6% retracement of the 2014-2016 top-to-bottom rout. As the bullish flag pattern nears completion, we should expect a breakout soon – the swing highs around 1.14-1.15 offering the main resistance.

Stocks go up, cases go up, US jobs harder to call

European equities followed the US and Asia higher on hopes for a vaccine and a strong US jobs report, whilst shrugging off soaring numbers of new cases in the world’s largest economy.

US cases of Covid-19 continue to surge, rising more than 50,000 in a single day for the first time. Florida’s new case count rose 4.3%, vs the previous 7-day average of 5.7%, so indications perhaps that the rate of new cases may be coming down there. But California, Texas and Arizona recorded their largest one-day rise in cases.

Meanwhile, Tokyo also reported its highest number of cases in two months. Whilst the rise in cases is slowing the reopening of many states, some may argue that the US is simply heading for herd immunity a lot faster than anywhere else; in the long run this may help, not hinder, the country’s ability to get back to normal social and economic functioning.

Investors largely are shrugging off higher cases though as Pfizer reported positive results from a vaccine trial. But we have been here before – it’s too early to get too excited – but a working vaccine is the holy grail as it would allow real normality to return to the economy.

The S&P 500 rallied 0.5% to move to the 61.8% retracement, whilst the Nasdaq Composite set a new record high. The Dow finished a little lower. Shares in Asia took the cue to rally, whilst European bourses have opened with strength on Thursday morning. Lots of noise around but equity markets are not showing any real trend – major indices are still sitting around the middle of the June ranges.

Nonfarm payrolls tough to call

The ADP jobs report showed private employers in the US created 2.4m jobs in June, while the figure for May was completely revised to show a gain of 3m gained versus a previous estimate of 2.76m lost. Nonfarm payrolls today are again especially hard to call given the crisis. For May the consensus was for 8m jobs to be lost, but instead 2.5m were added.

For June the consensus is for 3m+ to be created. But the exceptionally wide range of forecasts suggests no true consensus – as I’ve mentioned a few times here the data is particularly difficult and noisy right now. Even if we get 5.5m created over the last two months, it still leaves 15m or so from the 20.5m lost in April unemployed, so recovery to the status quo ante remains a long way off.

Fed minutes indicated policymakers are keen to offer more detailed forward guidance about the path of interest rates but seemed less ready to go for yield curve control – a policy it last pursued during the second world war and one that the Bank of Japan is currently practising with limited success in achieving its goals.

Which leads us on nicely to the theme of Japanification, which is a thread which we like to explore from time to time. It can be summed up long-term economic malaise, deflation and a reliance on ever-larger monetary easing and low bond yields to prop up growth. Usually it’s Europe that seems to be tarred with this particular brush, but lately there are murmurings that the UK is heading down the same path.

For the first time, 30-year gilt yields fell below their Japanese counterparts this week. This is anomalous for a couple of reasons. First, the fact that gilt yields across the curve are at or near record lows highlights that investors haven’t blinked at the super-high issuance by the government to fund its response to the pandemic – the Bank of England’s asset purchase programme is doing its job. Two, the yield on Japan’s long bonds went up because the Bank of Japan said it would increase purchases of debt up to 10 years in maturity but keep buying of longer-dated maturities unchanged. This pushed up the yield curve, a fine example of yield curve control in action.

Whilst the crisis is disinflationary at present, the vast increase in the supply of money, which unlike the post-2008 QE is not going to end up sloshing around the banks but be put to work directly in the economy, means it may be too soon to call Britain the next Japan, whatever the chart vigilantes tell us.

Gold eases back from multi-year high, crude oil soft on rising gasoline stocks

Gold pulled back off its recent multi-year high in a sharp corrective move but has found support around $1765. Yesterday I said fading momentum on the CCI with a bearish divergence to the price action suggested a near-term pullback may be required – this came a little swifter than expected and we may see further weakness as a bearish flag formation may call for another leg lower to $1750.

Crude oil stocks declined by 7.2m barrels vs an expected drop of about 1m, driven by lower imports due to an expected drop from Saudi Arabia. Price action was weaker on the news though as gasoline stocks rose 1.2m barrels vs an expected decline of 1.6m. WTI (Aug) initially eased back but has recovered a little to sit on $40. Again, as mentioned previously, the estimates on WTI stocks right now are also way off the mark.

In FX, GBPUSD broke out as the dollar was offered across the board. The double tap on 1.2250 produced a strong bounce that carried forward to see the downtrend broken as it broke out of the channel resistance and cleared the 50-day simple moving average. Bulls will need to see the last swing high around 1.2540 cleared to reassert an uptrend. Brexit headline risk remains a big hurdle to getting real momentum behind a rally for cable, but if there is a breakthrough the upside could run very quickly. EURUSD pushed up on dollar weakness with bulls needing to take out the Jun 29th high at 1.12877.

Candlestick price chart showing the pound to dollar FX pair

Wochenausblick: FOMC-Sitzungsprotokolle und NFP dominieren den Kalender

Während zum Wochenanfang chinesische PMIs im Fokus liegen werden, wird der amerikanische Wirtschaftskalender die nächsten Tage, mit dem Erscheinen der jüngsten ISM Manufacturing PMI, FOMC-Sitzungsprotokollen und Arbeitsmarktzahlen (ohne Landwirtschaft) für Juni, dominieren.

Chinesische PMIs 

Es wird Zeit für die neusten PMIs für China – da sie die ersten globalen PMI-Zahlen sind, die diesen Monat veröffentlicht werden, stellen sie die erste Gelegenheit des Marktes dar, zu sehen, wie sich die Dinge entwickeln.

Chinas Erholung könnte dank neuer COVID-19-Ausbrüche auf dem Spiel stehen, die jüngsten PMIs werden aber nichtsdestotrotz als eine Art Blaupause für die Entwicklung anderer Nationen im Anschluss an die Bekämpfung des Virus und verschobenem Fokus auf die Wiedereröffnung der Wirtschaft, genommen werden.

Deutschland, Eurozonen-Inflation 

Verbraucherpreise sanken um 0,1% in der Eurozone im Mai, obwohl das sicher keine Überraschung war. Die Inflationszahlen dieser Woche könnten ein weitere Abnahme zeigen, was dank eines riesigen Einbruchs der Nachfrage, steigender Arbeitslosigkeit und den ausgegebenen Konjunkturleistungen der Europäische Zentralbank zu erwarten ist. Letzte Woche sagte Fitch voraus, dass sich die Kerninflation der Eurozone über die nächsten 18 Monate verlangsamen und 2021 bei unter 0,5% liegen wird.

Eine länger anhaltende Deflation ist schlecht für die Wirtschaft, aber kurzfristig sind diese Ergebnisse zu erwarten und so sind die Marktauswirkungen der VPI-Daten in letzter Zeit etwas geschwächt.

Einzelhandelsabsatz in Deutschland 

Die Konsumaktivität hat sich in den USA und in England seit Lockerung der Einschränkung stark erholt – wird das in Deutschland auch so? Der Einzelhandelsabsatz in den USA sprang 17,7% und schlug damit die Markterwartungen von einem Anstieg von 8%, während der Absatz in England um 12%, anstatt der erwarteten 5,7%, gestiegen war.

Die Einzelhandel verzeichnete im April ein Minus von 5,3%, was aber wesentlich besser als die von Experten erwarteten -12% waren. Ein Anstieg der Online-Verkäufe half das Minus abzufedern. Es wird erwartet, dass die Absätze im Mai mit der Wiedereröffnung der Läden um 2,5% gestiegen sind, aber wie in den USA und in England könnten wir weitaus bessere Zahlen sehen.

US-ISM-Fertigung 

Die US-Fertigung ringt nach dem Schock der Pandemie mit der Erholung. Der ISM-PMI für Mai stieg nach den niedrigsten Werten des letzten Jahrzehnts im April im Mai wieder an, verfehlte aber die Markterwartungen um einen halben Punkt. Eine stärkere Erholung wird für Juni erwartet, aber der Fertigungs-PMI, der letzte Woche von IHS Markit veröffentlicht wurde, enttäuschte die Erwartungen mit anhaltendem Schrumpfen, während die Eurozone und England sogar wieder ein Wachstum verzeichnen können.

FOMC-Sitzungsprotokolle 

Das FOMC versetzte den Märkten infolge seines letzten Treffens einen Schlag und veröffentlichte schlechter als erwartete Wirtschaftsprognosen, die viel dazu beitrugen, die Idee zu zerstören, dass die USA eine V-förmige Erholung erleben würden. Entscheidungsträger merkten an, dass der Zinssatz bis mindestens 2022 bei beinahe 0% bleiben und die Ankaufsrate für Asset in den kommenden Monaten steigen würde.

Die Protokolle des Treffens werden weitere Details mit sich bringen, wobei die Märkte besonderes Interesse an jeglicher Erwähnung zur Kontrolle der Zinsstrukturkurve haben dürften, da dies das wahrscheinlich nächste Instrument der Fed zur Kontrolle der Zinsrate sein wird. Der genaue Zeitpunkt ist noch unklar, die Protokolle könnten hier aber weitere Hinweise liefern.

US-Beschäftigungszahlen außerhalb der Landwirtschaft 

Das liegt daran, dass der am Unabhängigkeitstag der USA, der 4. Juni, dieses Jahr auf einen Samstag fällt und der gesetzliche Feiertag dann Freitag ist. Das bedeutet, dass die Beschäftigungszahlen außerhalb der Landwirtschaft am Donnerstag zu erwarten sind.

Die Zahlen des letzten Monats überraschten mit einer Zunahme von 2,5 Millionen Beschäftigten gegen die Vorhersage von 8 Millionen neuen Arbeitslosen, was darauf hindeutet, dass sich die US-Wirtschaft schneller erholt als bisher gedacht.

In letzter Zeit haben die wöchentlichen Arbeitslosenzahlen jedoch enttäuscht – obwohl die Zahlen weiter gesunken sind, war die Abnahme geringer als erwartet. Deutet dies auf eine permanenter Vernarbung des Arbeitsmarkts hin, und falls ja, müssen die Erwartungen angepasst werden, dass die NFP weiterhin so starke Zahlen wird berichten können?

Highlights auf XRay diese Woche

Lesen Sie den gesamten Zeitplan der Finanzmarkt-Analyse und des Trainings.

07.15 UTC Daily European Morning Call
From 15.30 UTC 30-Jun Weekly Gold, Silver, and Oil Forecasts
17.00 UTC 01-Jul Blonde Markets
19.00 UTC 01-Jul Introduction to Currency Trading: Is it For Me?
12.25 UTC 02-Jul

US Nonfarm Payrolls: Live Market Analysis

 

Die wichtigsten Wirtschafts-Ereignisse

Behalten Sie die wichtigsten Ereignisse des wirtschaftlichen Kalenders dieser Woche im Auge:

12.00 UTC 29-Jun German Preliminary Inflation
23.30 UTC 29-Jun Japan Unemployment / Industrial Production
After-Market 29-Jun Micron Technology – Q3 2020
01.00 UTC 30-Jun China Manufacturing, Non-Manufacturing PMIs
06.00 UTC 30-Jun UK Finalised Quarterly GDP
30-Jun easyJet – Q2 2020
09.00 UTC 30-Jun Eurozone Flash CPI
12.30 UTC 30-Jun Canada Monthly GDP
14.00 UTC 30-Jun US CB Consumer Confidence
After-Market 30-Jun FedEx Corp – Q4 2020
01.45 UTC 01-Jul Caixin Manufacturing PMI
06.00 UTC 01-Jul Germany Retail Sales
Pre-Market 01-Jul General Mills – Q4 2020
Pre-Market 01-Jul Constellation Brands – Q1 2021
12.15 UTC 01-Jul US ADP Nonfarm Payrolls Report
14.00 UTC 01-Jul ISM Manufacturing PMI
14.30 UTC 01-Jul US EIA Crude Oil Inventories
18.00 UTC 01-Jul FOMC Meeting Minutes
01.30 UTC 02-Jul Australia Trade Balance
12.30 UTC 02-Jul US Nonfarm Payrolls (Friday is US Bank Holiday)
01.30 UTC 03-Jul Australia Retail Sales
All Day 03-Jul US Bank Holiday – Markets Closed

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