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TOO HOT TO CUT! Last week, global stock markets were buoyed by stellar labour market data in the US, indicative of a 'hot' market. This led to higher bond yields as markets priced in fewer rate cuts in 2024, while the Fed at its meeting last week also effectively ruled out a March rate cut. This week, the calendar is light but data from the Eurozone including retail sales may be of note. Last week, the S&P 500 rose by 1.4% (MTD 2.3%, YTD 4.0%), while the Euro Stoxx 50 rose by 0.3% (MTD -0.2%, YTD 2.8%). Stocks continued to push higher amid strong economic data, particularly in the US. US labour market data was very strong. Non-farm payrolls showed that 353K jobs were added in January, nearly double consensus expectations of 185K. Unemployment remained low at 3.7% and average hourly earnings also rose by more than expected (4.5% y/y). Job openings were up by 1.1% m/m in December, with the ratio of job openings to unemployed also rising slightly, indicative of robust labour demand. Eurozone Q4 GDP was flat quarter on quarter, which resulted in full-year 2023 GDP being up by 0.5% y/y. On a country level, activity was mixed. German GDP fell by 0.3% q/q and that for France was flat, both in line with expectations. In Spain and Italy, GDP rose by more than expected (0.6% and 0.2%, respectively). The Fed left policy unchanged at its meeting as expected, but stated that rate cuts would only be implemented when the Committee has "gained greater confidence that inflation is moving sustainably toward 2%." Powell said this was unlikely to occur by the next meeting in March. The Bank of England also left policy unchanged and moved to a less hawkish stance. It stated that price pressures were now "more evenly balanced", but also that "key indicators of inflation persistence remained elevated". It pushed back against the notion of a rate cut in the first half of 2024. As a result of strong labour market data and the Fed effectively ruling out a March cut, rate markets now expect 115bps of easing from the Fed in 2024, down from 135bps a week earlier, from a current Fed funds range of 5.25-5.50%. The Bank of England is projected to cut by 100bps from the current base rate of 5.25%. Markets in a minute provided by Irish Life Investment Managers

Weekly Market Newsletter / Week #31 Highlights of the week - Major benchmarks closed lower amid a busy earnings season and key economic data. - Nonfarm payrolls report showed a sharp slowdown, with only 114,000 jobs added in July. - The unemployment rate rose to 4.3%, the highest since October 2021. - Long-term interest rates fell sharply, with the 10-year Treasury yield dropping to 3.79%. - Major European indexes also declined, with significant drops in Germany, France, and Italy. - The Bank of England cut interest rates for the first time in four years. - Eurozone inflation rose to 2.6%, and the economy grew by 0.3% in Q2. - The yen strengthened, impacting export-oriented companies. - The Bank of Japan raised its key interest rate and outlined bond purchase tapering plans. - In China Manufacturing PMI indicated a third consecutive month of contraction. - Industrial profits rose by 3.6% in June, driven by revenue recovery and industrial production growth. https://lnkd.in/eFcYYJ-e

U.S.MARKET  🇺🇸 Yesterday, the major indices lacked significant movement, with the S&P 500 declining by 0.30%, the Dow Jones down 0.54%, and the Nasdaq gaining 0.25%. Investors digested mixed macroeconomic data, leading to caution. In Asia, the stock market trended mostly negative. - The ADP report showed that non-agricultural private sector employment increased by 99,000 in August, far below the expected 144,000. July’s numbers were also revised down from 122,000 to 111,000, pointing to a faster-than-expected cooling of the labor market. This triggered a bond-buying response from investors who anticipated a sharper rate cut from the Fed. - Meanwhile, the services sector PMI rose slightly to 51.5 in August, better than the forecast drop to 51.3. While new orders increased, both the business activity and employment components saw declines. Initial jobless claims last week fell to 227,000, below the predicted 231,000, but the weak ADP data overshadowed the positive impact. 🤔 The upcoming employment data from the Ministry of Labor might come in weaker than anticipated, particularly given the recent ADP estimates showing slower growth rates. If the payroll figures turn out to be softer than expected, there's a good chance the Federal Reserve might consider a 50 basis point rate cut at their next meeting. Although ADP reports haven’t always been the best predictor of non-agricultural employment numbers in past years, their correlation with the Ministry's data has improved this year. 📈 9 out of 11 sectors of the S&P 500 ended the day with a decline. The health sector performed the worst, with corrections in Eli Lilly (#LLY) and McKesson (#MCK) dragging it down. Cyclical sectors, especially financials and industry, also traded below the market due to weak macroeconomic data. - However, there was some moderate buying in the largest companies, which helped support the Nasdaq. The "magnificent seven" stocks saw a 1.6% rise. After the market closed, Broadcom’s (#AVGO) mixed earnings report negatively impacted the tech sector, causing its shares to drop nearly 7%. 📈 PUBLICATION OF ECONOMIC DATA TODAY  • Change in Nonfarm employment from the U.S. Department of Labor (August) • Unemployment rate (August) • Average hourly wage (August) HAVE A NICE DAY #eToro #sp500

Reasons For Market correction . 1) Fear of recession in US Fears of a U.S. recession intensified after data released post-market hours on Friday showed that job growth in July slowed more than expected. The Labor Department reported that nonfarm payrolls increased by just 114,000 jobs last month, falling short of the 175,000 expected and well below the 200,000 jobs needed to keep pace with population growth. The unemployment rate also rose to 4.3%, nearing a three-year high. 2) Unwinding of Yen carry trade After the Bank of Japan (BoJ) raised interest rates to 0.25% and reduced bond purchases, the yen appreciated and forced investors to unwind their positions to avoid losses. This is leading to a selloff in US tech stocks and affecting global markets, including Asia. Meanwhile, Japan's Nikkei index plunged 5.5%, hitting a seven-month low and marking its largest three-session loss since the 2011 financial crisis. 3) Geopolitical Tensions Geopolitical tensions weighed on market sentiment as concerns grew over the potential for attacks from Iran and its regional allies. According to media reports, U.S. Secretary of State Antony Blinken has warned G7 counterparts that an attack by Iran and Hezbollah against Israel could begin as early as Monday. In response, the Times of Israel reported that the Benjamin Netanyahu-led government might authorize a preemptive strike on Iran to prevent an attack on Israeli soil. Rising tensions in the oil-rich Middle East could drive fuel prices higher if the conflict escalates and disrupts global supplies, further fueling inflation. 4) Overvaluation concerns Last week, India's market capitalization to GDP ratio, popularly known as the Buffett Indicator, had jumped to record high of 150%. "Valuations in India, driven mainly by sustained liquidity flows, continue to be high particularly in the mid and smallcaps segments. The overvalued segments of the market like Defence and Railways are likely to come under pressure," Dr Vijayakumar said. 5) Triggerless Q1 result season Although in-line with market expectations, the June quarter results season hasn't so far given any major positive trigger to take the market ahead. "The Nifty EPS estimate for FY25 was cut by 1.2% to Rs 1,120, largely owing to Reliance Industries and BPCL. FY26E EPS was also reduced by 0.8% to Rs 1,319 (from Rs 1,330) as upgrades in Infosys, Coal India, Tata Motors, and Maruti were offset by downgrades in Axis Bank, HDFC Bank, ICICI Bank, and IndusInd Bank," Motilal Oswal said. 6) Technical triggers After scaling 25,000-level last week for the first time, Nifty found itself succumbing to the corrective pressure in the end and remained vulnerable to profit-taking bouts from higher levels. Thank you

The US stock market just had its roughest week since March 2023, highlighted by a worrisome jobs report. Last February, nonfarm payrolls surprisingly rose by only 201,000 compared to the anticipated 400,000, while the unemployment rate ticked up to 3.6%. This stirred significant market volatility with notable declines in major indexes like the Dow Jones, S&P 500, and the Nasdaq. 📉 What's driving this turbulence? Analysts point to a cocktail of inflation fears, higher interest rates, and geopolitical tensions spanning from the Russia-Ukraine conflict to tensions between the US and Iran. 🌍 Yet, it's not all doom and gloom. Despite the underwhelming job data, some economists remain optimistic, citing a generally robust labor market and strong consumer spending. This optimism suggests that some see the dip as a buying opportunity, while others adopt a wait-and-see approach, especially with regards to the Federal Reserve's next moves. 📊 What do you think about the market's reaction to these mixed signals? Is this a temporary setback or a sign of more significant shifts in the economic landscape? How are you adjusting your investment strategy in light of these developments? #StockMarket #Investing #EconomicNews #FederalReserve #Inflation #Unemployment #GeopoliticalTension #MarketVolatility Feel free to share your thoughts and strategies in the comments below! Your insights enrich our discussions. 🗣️👥

🟨 Global stock markets rose to record levels ahead of critical US non-farm payrolls data. MSCI World Index broke a record with the support of a series of data from the USA. 🟡 In Asia, the Japanese Topix index also reached its intraday record level, while Korean stocks rose with Samsung's balance sheet. US stock futures are slightly higher in the morning. Bonds remain calm ahead of non-farm data. The US 10-year bond yield is at 4.355 percent. 🟡 Employment data to be announced in the USA is expected to reflect a slowdown in non-agricultural employment and a cooling in wage increases. 🟡 Average hourly wages are expected to increase by 3.9 percent annually, the lowest level in the last three years. The unemployment rate is also expected to remain at 4 percent, the highest level in more than two years. If expectations come true, this gradual cooling in the labor market may strengthen the Fed's scenario of making two interest rate cuts this year. 🟡 Investors also predict two interest rate cuts in the futures market, September and December.

Dow Jones Industrial Average gains 450 points as investors up rate cut bets after softer NFP The Dow Jones Industrial Average (DJIA) experienced a significant gain of 450 points as investors adjusted their expectations for interest rate cuts following a softer-than-anticipated Nonfarm Payrolls (NFP) report. The NFP data, which came in below expectations, indicated a potential weakening in the US economy, leading to increased speculation that the Federal Reserve might implement rate cuts. Here’s a summary of the key points: The US added 175,000 jobs in April, which was less than the forecasted 238,000 jobs. The unemployment rate saw a slight increase to 3.9%. Average Hourly Earnings grew by 0.2% month-over-month, below the expected 0.3%. The ISM Services PMI dropped to a 16-month low of 49, indicating a contraction in economic activity. The CME’s FedWatch Tool now indicates a 64% chance of at least a quarter-point rate cut at the Fed’s September meeting. The market’s response to the NFP report was somewhat counterintuitive, with equity prices rising as the economic data began to show signs of deterioration. Website: https://lnkd.in/dB_iR_Dz Linkedin: https://lnkd.in/dthKuTyX Facebook: https://lnkd.in/d2U2XMm7 YouTube: https://lnkd.in/dVUPV9aA #tradeprosperity #worldnews #trading #DowJones

🚀 Futures Steady Before Key Payrolls Data as Investors Weigh Middle East Risks 🌍💼📈 🌅 Futures Today: Dow ➖ 0.07%, S&P 500 🔼 0.07%, Nasdaq 🔼 0.14% 📊💹 #StockMarket #Investing 📅 Anticipating Payrolls Data Report ⏳🧐 Economy expected to maintain a moderate job growth pace, with unemployment steady at 4.2% 🏛️🔍 #JobsReport #USEconomy 🇺🇸 🗨️ "The labor market remains steady with firms slower to hire but hesitant to fire, supporting consumer spending," 🌟📉🛒 #LaborMarket #HiringTrends 💡 The Fed's September rate cut of 50 bps aims to prevent further job market weakening. Today's data will be crucial for future policy decisions 📉🏦 #FederalReserve #InterestRates 📈 November Rate Cut Odds 🗓️🔮 Smaller 25 bps reduction predictions rise to 68% from 46.7% #FOMC #EconomicPolicy ⏳ Rate Cut Expectations 📉⏳ Borrowing costs might fall 66 bps before year's end, down from 79 bps a week ago 🔄📉🗓️ #InterestRates #EconomicForecast 🔍 At 5:42 a.m. ET: Dow 🎢📉 -28 pts (0.07%) S&P 500 📈 +4 pts (0.07%) Nasdaq 📈 +27.5 pts (0.14%) #MarketWatch #FuturesTrading 🗣️ NY Fed President John Williams' Comments 🎤👂 Insights on the job report and policy are highly anticipated. #FedSpeak #EconomicOutlook 📉 Wall Street Recap 🏦📊 Main indexes closed lower amid Middle East tensions and a workers' strike. #MarketRecap #InvestorSentiment 🔋 Energy Stocks Surge 🌍💥 Occidental Petroleum 🌟 +0.86% Exxon Mobil 🛢️ +0.59% Chevron ⛽ +0.69% Crude prices 📈 due to supply concerns in the Middle East. #EnergyStocks #OilMarket 📅 S&P 500 Energy Sector 📈 On track for biggest weekly jump since March 2023 🌟📈 #EnergySector #StockMarket 🚢 Ports Reopen 🌊⚓ East and Gulf Coasts clearing cargo after a workers' wage deal, but expect a backlog delay. #Shipping #Logistics 🔻 Spirit Airlines Plunge 🛫📉 Down 44% amid bankruptcy talks after JetBlue merger fail. #TravelIndustry #Aviation ⚡ Tech Stocks Emotion 🤖💻 Tesla ⚡ +1.3% Amazon 🛒 +1.3% Nvidia 🔍 +0.1% AMD 💾 +0.1% Broadcom 📡 +0.39% #TechStocks #NASDAQ 🌐 Stay tuned for more! 📊🌟🎯 #Finance #Investing #MarketUpdates

Bad news for the markets has been taken negatively again Yesterday was the first trading day of September, which was marked by fairly sharp shedding in all but the defensive sectors (Staples, Utilities and Healthcare). The strongest outflows were seen in the technology sector, although the financial results of companies in it are strong and judging by the guidebook, there is no slowdown in current trends. But bad macroeconomic data came out yesterday: S&P Manufacturing PMI for August fell sharply to 47.9 vs. 49.6 points in July. And while a boundary around +-0.5 points around 50 can be considered a static error, a sharp decline to 47.9 points is already a bad call for the economy. Interesting fact: in the first half of 2024, almost half of GDP growth was taken up by investments in inventory growth. That is, there was no actual demand for these goods, but companies were building up inventories for future demand. With consumer spending consistently exceeding income, companies may have stopped investing in inventories, which is what caused the PMI to fall. Citi predicts Non-Farm Payrolls will rise by 150,000 (report Sept. 6). This will lead to a further rise in unemployment. Previously, NFP data has diverged from unemployment data, but last month's NFP data was adjusted, showing a significant weakening in the labor market. How and why the NFP data, which is counted on payrolls (hard numbers), is adjusted remains a mystery to me. Since unemployment data is measured by surveys (opinions). BofA cites a new recession indicator - the private sector's share (%) of employment growth excluding education and health care. Historically, a recession in the U.S. has occurred when the private sector's share of all job growth has fallen to 40% or below. In the latest July data, that share has fallen to 38%. Individual news alone does not affect the market, but the string of bad news over the past 2 weeks is a full-blown wake-up call for a weakening consumer and economy. Citi believes that the combination of factors will lead to a 0.5% rate cut in September, although I'm leaning toward a 0.25% cut and a downward signal at the next meetings. And if the Fed cuts the rate by 0.5%, I view that as the Fed admitting to a recession retroactively that has not been publicly announced. Under the current paradigm, funds are reducing exposure to cyclical and technology assets for the sake of preserving returns and moving into more defensive sectors and bonds. In my opinion, long bonds in the U.S. now remain one of the most promising instruments for the year ahead, while stocks are not prevented from a 5-10% correction in the S&P 500 index.