© Reuters
Investing.com – Stock futures edged lower in New York as investors prepared for the release of the closely-watched U.S. jobs report for December. Economists forecast nonfarm payrolls were lower than last month, although recent data suggests resilience in labor demand that could boost the Federal Reserve's attempt to engineer a soft landing for the world's largest economy.
1. Non-farm payrolls are coming
The American economy is expected to have added fewer new jobs in December compared to the previous month, but solid growth is still expected.
Economists estimate that the U.S. population increased by 170,000 last month, compared to 199,000 in November. Inflation is forecast to have risen 0.3% monthly, slowing slightly from the previous figure of 0.4%. Meanwhile, an increase from 3.7% to 3.8% is expected.
A series of data earlier this week pointed to stable labor market conditions. Hiring by private employers in December far exceeded expectations, and the number of job vacancies fell to its lowest level in almost three years.
Still, labor demand is showing early signs of steady weakening under pressure from an unprecedented Fed monetary tightening campaign that has pushed interest rates to a 22-year high. However, if the slowdown remains gradual, it bodes well for a so-called “soft landing” – a scenario in which the Federal Reserve manages to combat inflation without causing a collapse of the overall economy.
2. Futures inches lower
U.S. stock futures were in the red on Friday as investors prepared for the release of the all-important jobs report.
As of 5:07 a.m. ET (10:07 GMT), the contract was down 88 points, or 0.2%, down 11 points, or 0.2%, and down 47 points, or 0.3%.
The benchmark fell 0.3% in Thursday's trading session and the tech-heavy index fell 0.6% as Wall Street continued to start the new year weakly. Of the three major averages, only 30 stocks closed in positive territory, rising slightly by 0.03%, thanks in part to solid performance by financial stocks.
The weakened sentiment has dampened hopes that the Fed will cut interest rates in early 2024. Although the interest rate outlook last month was more dovish than previous forecasts, Fed minutes released this week suggested policymakers expect borrowing costs could remain elevated. for some time.”
3. Gold is on track for a weekly decline as the dollar gains
Gold prices fell in European trading on Friday after falling below key levels this week, while the dollar rose sharply.
After rallying towards the end of 2023, the yellow metal posted some losses this week. But gains stalled as investors sought to take profits and uncertainty grew over the Fed's interest rate plans.
The price fell 0.3% to $2,037.79 a troy ounce, while it fell 0.3% to $2,044.25 a troy ounce by 5:09 a.m. ET. Both instruments lost between 0.8% and 1% this week.
Recent bets that rate cuts could begin as early as March 2024 have been withdrawn, sending the dollar higher. The dollar is on track for a weekly gain of over 1% – its best since July 2023.
“The beginning of the year has put a little strain on this optimism [over March rate reductions]and our team continues to expect the first cut to occur in May,” ING analysts said in a note.
4. Crude oil on track for weekly increase
Oil prices rose on Friday, partly due to concerns about possible supply disruptions due to recent unrest in the Middle East.
At 5:09 a.m. ET, futures were trading 1.0% higher at $72.92 a barrel, while the contract rose 0.8% to $78.19 a barrel.
Both benchmarks are on track to end the first week of the year around 1% higher. Attacks by Iran-backed Houthis in Yemen on shipping vessels in the Red Sea have fueled concerns about the flow of supplies through a key trade artery between Europe and Asia.
However, the gains were capped by data showing a massive increase in U.S. oil product inventories in the final week of 2023. The data suggested demand remained weak in the world's largest oil consumer.
5. Apple supplier Foxconn warns of a decline in sales in the first quarter
Foxconn, a major maker of Apple's (NASDAQ:) flagship iPhone smartphone, warned that it expects first-quarter sales to decline year-over-year after weaker demand in the previous three-month period.
In a statement, the Taiwan-based group – officially known as Hon Hai Precision Industry Co Ltd – said its first quarter sales figures compare difficult with the first three months of last year, when sales were 10%, boosted by the Resuming normal factory operations after the COVID crisis. The company did not provide specific numerical guidance.
The announcement comes after sluggish customer demand led to “flat” annual sales in the fourth quarter of Foxconn's smart consumer electronics division, which includes mobile phones.
Fears about demand for iPhones led two analysts to downgrade Apple shares this week, negatively impacting the tech giant's shares. However, in terms of market value, Apple remains the most valuable company in the world.
Comments are closed.