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Payrolls Day, Europe’s Covid Wave, Chinese Developer Debt

© Reuters.

By Geoffrey Smith

Investing.com – It is Payroll Day and new hires are expected to have recovered well in October from an 8-month low in September. Median income and labor force participation will also be key variables when the headlines hit at 8:30 a.m. ET. Europe is catching Covid again, and China has now taken health measures in almost half of its provinces to defend its zero tolerance policy. Another major Chinese property developer has gotten into trouble with its debts – and not just with the debts of distant foreigners. Shares will rise higher upon opening, but Peloton and Uber (NYSE 🙂 will come under pressure after weak updates late Thursday. This is what you need to know in the financial markets on Friday November 5th.

1st day of payroll

The official monthly labor market report for the US will be released at 8:30 a.m. ET (1230 GMT) amid signs that the job outlook improved significantly in October as the economy outpaced the summer wave of delta-19 Covid-19.

Analysts assume that the number of employees outside the agricultural sector rose by 450,000 by the middle of last month, compared to an eight-month low of 194,000 in September, where the latest experience also makes an upward correction possible. However, the focus is also on the labor force participation rate, which has not recovered in line with overall employment, and income growth, which is expected to accelerate from 4.6% in September to 4.9% year-on-year.

The weekly numbers on jobless claims suggest that labor market dynamics have remained intact since the payroll report cut-off date. Initial jobless claims hit a second consecutive low on Thursday after the pandemic.

2. Europe catches Covid again

The World Health Organization warned of up to 500,000 deaths from Covid-19 this winter in the Europe region (including Russia) as new infection and hospitalization rates rise across much of the continent.

Seasonality, declining immunity due to the first wave of vaccinations and, above all, persistently high vaccination resistance seem to be driving the latest wave, which is dominated by the delta variant. New infections and deaths relative to the population are highest in Eastern Europe, where vaccination rates are lowest. In Russia, over 1,100 deaths die every day and the number of new infections is around 40% above their previous high level last winter.

Germany and the Netherlands are also seeing new infections at 11-month highs, which raises fears of new bans in these countries. Developments come as the eurozone industrial sector experiences a sharp slowdown due to supply chain disruptions. German industrial production fell for the second consecutive month in September, while French production also fell and Spanish production growth slowed to a minimum. Retail sales in the euro zone also surprisingly fell by 0.3% in September.

3. stocks will open higher; Uber and Peloton under pressure

US stocks are likely to open higher for the most part to end the week at or near new record highs as confidence in the strength of the economy ties in with Federal Reserve Chairman Jerome Powell’s assurances about the pace of rate hikes.

By 6:20 a.m. ET, they rose nine points or less than 0.1% while they rose 0.2% more significantly and rose 0.4%.

Among the stocks likely to be in focus later is Peloton Interactive (NASDAQ :), which plummeted on Thursday after slashing its sales forecasts by nearly a third hour. Uber will also be under pressure, albeit not as extreme, after reporting a net loss of $ 2.4 billion that overshadowed its first (heavily adjusted) profit at the base operating level.

4. The problems of the Chinese developers are spreading, as is the Covid outbreak

Kaisa group (HK 🙂 opened a new front in the struggle for the stability of the Chinese financial system. The real estate developers, which, unlike the dollar bonds held primarily by overseas and professional corporations, are largely held by domestic retail investors.

Kaisa is the third largest international debt issuer in the sector and has a history of restructuring as it became the first Chinese issuer to do so five years ago.

Worryingly, the missed payments are coming in spite of no signs of financial stress in the company’s accounts, which the authorities easily met the three “red line” indebtedness metrics in their latest disclosures. Elsewhere, the Wall Street Journal reported selling two private jets to raise $ 50 million for originally missed interest payments, and for China for the fifth time since August.

5. Oil stabilizers after sliding after OPEC

Crude oil prices stabilized after falling Thursday in response to guidance from, which was expected to address the risks of renewed supply overhang next year.

With soaring Covid-19 cases in Europe and a widening outbreak in China, again causing extreme public health measures in nearly half of its provinces, the market is more inclined to heed such warnings.

By 6:30 a.m., futures were up 1.1% to $ 79.66 a barrel, while they were up 0.6% to $ 81.02 a barrel. The Baker Hughes and Dates round out the week later.

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