Update 03-04-2020: Markets remain relatively unshaken despite -700k non-farm reading
Once again the markets were relatively calm in the face of some horrendous jobs data out of America.
Though not immediately alarming as Thursday’s 6.6 million new jobless claims, nor last week’s 3.3 million filing for unemployment, Friday’s nonfarm figures were pretty concerning. The headline number came in at -701k against the -100k forecast (and the 273k seen the month previous). That means the US shed 701,000 jobs during the period the report covers – crucially a period that omits the last fortnight, i.e. the timeframe in which nearly 10 million Americans lost their jobs. The unemployment rate itself, meanwhile, rose from 3.5% to 4.4% month-on-month.
And yet, just as they did yesterday, when they were distracted by Trump’s Russia/Saudi oil deal promise, and last week, when they were basking in the glow of the Senate’s $2.2 trillion stimulus package, investors took these jobs figures in their stride.
Now, this isn’t to saw equities were in the green as they were on the days of the unemployment claims readings. However, the Dow Jones did only open 165 points lower, around a 90 point improvement on what the futures were forecasting.
Europe, meanwhile, didn’t get any worse. Instead the FTSE maintained a 0.9% decline – BP and Shell remain stubbornly down between 4.5% and 5% despite Brent Crude climbing another 12% – with the DAX actually trimming its losses to 0.2%.
Investors may be banking on further stimulus measures from the US government and Federal Reserve, in order to combat an American employment landscape that is only set to get worse (some analysts are estimating a further 20 million jobs lost).
Update 02-04-2020: Dow Jones shakes off news that 6.65 million Americans filed for unemployment last week
The financial markets often (rightly) get stick for being out of touch with economic reality. That was arguably the case on Thursday, as the Western indices broadly managed to brush off a truly horrifying piece of jobs data.
Last week it was revealed that for the 7 days to March 21st, a record 3.28 million people in the US had filed for unemployment, a figure almost 5 times the worst number seen during the financial crisis.
Well, brace yourselves – for the week ending March 28th, a further 6.648 million Americans had put in jobless claims. That’s close to 10 times the size of 665,000 seen in March 2009 or the, prior to last week, 695,000 all-time record set in October 1982.
Effectively 10 million people unemployed, in the space of a fortnight.
And yet, though the markets did have a bit of a wobble once that terrifying number was released, the Dow Jones actually managed to add 140 points after the bell.
Of course some context is required. The Dow had fallen 4.44% on Wednesday night, so investors are maybe more willing to buy into the index. And it may be hopeful that such an alarming number will spur on the US government to announce more stimulus measures. However, to many on the outside looking in, it doesn’t paint the most flattering picture of how the markets function.
Over in Europe the region’s indices were pulled from their intraday highs, just about tipping into the red. Though it wasn’t by much – the FTSE was basically flat, with the DAX down 0.35%. The CAC, meanwhile, clung into a 0.2% increase.
There may well be further losses to come. The US markets tend to save their big movements for nearer the end of the session. It still, however, marks the 2nd week in a row investors have taken a terrifying unemployment claims figure relatively in their stride. It will be fascinating to see how they react to tomorrow’s nonfarm jobs report, especially if it is one for the history books.
Update 01-04-2020: Dow Jones joins Europe in the red as April gets off to a rough start
Like its European peers, the Dow Jones dropped at the start of April, swiftly shedding 600 points.
That decline forced the Dow towards 21300, continuing to reverse the growth managed on Monday.
For those looking for them, there were a few slender reasons for cheer in the US. Ahead of Friday’s government-issued jobs data, the ADP nonfarm employment change reading came in at -27k, vastly better than the -150k forecast. The ISM manufacturing PMI also beat estimates at 49.1 against the 44.9 forecast, though still fell from 50.1 month-on-month.
Any goodwill to be gleaned from those numbers was overshadowed, however, by Donald Trump’s Tuesday warning that the next two weeks are going to be ‘very painful’, a statement that likely served to undermine sentiment not just in the US but across the board.
Europe did actually pull back from their intraday lows, though not enough to see Wednesday be anything but another bad session. The FTSE, hammered by its dividend-cancelling banking stocks, just above kept its head above 5500 after falling 150 points. The DAX, meanwhile, fall 3.4%, with the CAC, also dealing with banking losses for Credit Agricole, BNP and Societe Generale, was down 3.8%.
Update 31-03-2020: Europe clings onto gains as Dow Jones once again crosses 22400
As markets begin to move from March’s bloody battleground to the April’s troubled waters, the Western markets strained to push higher.
Rising late on Monday night, the Dow Jones didn’t have too much energy in it at the start of Tuesday’s trading. Nevertheless, a near 100-point increase still allowed it to cross 22400, leaving it a couple of hundred points shy of the highs struck last Friday.
It benefited from a surprisingly better than forecast CB consumer confidence, which fell from 132.6 to 120.0, compared to the 115.1 expected.
A positive open for the US tends to be a tonic for the European indices. And while they couldn’t get back to their morning highs, they did, at least, lift from lunchtime’s intraday lows.
A 1% rise for the FTSE kept it the right side of 5600, while a similar-sized increase for the DAX left it near 9900. The CAC, meanwhile, was unchanged at 4375.
Tuesday saw sentiment boosted by a pair of strong – some would say suspiciously so – PMIs from China. Well, Wednesday will see Europe and the US faced with their own final manufacturing and services readings for March, with the potential for downward revisions from the flash figures once the final week of the month is taken into account.
There’s also the small matter of the ADP non-farm figure. Jobs data is going to dominate the start of April – the week culminates with the government nonfarm numbers – so investors may be more interested than normal in the ADP reading. Analysts are expecting a swing from 183k to -150k month-on-month.