Market Sentiment Unmoved by Either Euroland GDP Data or U.S. Labor Market Figures
December 6, 2024
The U.S. dollar‘s biggest moves this Friday are gains so far of 0.6% against the Australian and New Zealand dollars and 0.4% relative to the Canadian dollar. The greenback has slipped 0.2% versus the Swiss franc and sterling, edged up 0.1% vis-a-vis the euro and shows no net movement against sterling.
Ten-year sovereign debt yields have fallen three basis points in France and the United States, two bps in the U.K., and by a single basis point in Germany, Italy and Spain.
In U.S. stock market action, the S&P 500 and Nasdaq barometers are 0.4% and 0.6% firmer, while the DOW has ticked only 0.1% higher. Elsewhere, share prices closed up 1.6% in Hong Kong, 1.1% in China and 1.0% in Indonesia but down 0.8% in Japan and 0.6% in Australia. French President Macron’s rejection of calls for his resignation and promise to nominate a new prime minister quickly reassured traders in the Paris stock exchange, which is up 1.2%.
Bitcoin’s price is hovering just slightly below $100k, and gold is o.3% firmer. Weak Chinese demand for oil has seen West Texas Intermediate crude drop 1.4% and below $68 per barrel.
The U.S. Labor Dept’s November job market data didn’t sway markets from an expectation that the federal funds target is likely to be lowered by 25 basis points on December 18. The data confirm that soft figures in October were indeed distorted by weather extremes and not representative of an economy that might be cooling too fast. The figures were robust but not drastically out of line with expectations nor the parameters that Fed officials find welcoming.
- Non-farm payroll employment rebounded 227k, and the net rise of jobs in September and October was revised upward by 56k.
- Average wage earnings went up 0.4% on month and 4.0% on year, matching October’s results.
- Unemployment ticked higher to 4.2% from 4.1% in the previous two months. The U6 measure of un- and under-employment also rose 0.1 percentage point to 7.8%.
- Labor market participation and the ratio of workers to population each slipped a bit.
Today’s other big data release was the revision to third-quarter GDP and employment growth in the euro zone. As reported in the earlier release, real GDP grew at a 2-year high non-annualized 0.4% quarterly pace and was 0.9% higher than a year earlier. Growth in most member countries also matched earlier estimates announced in mid-November, but there were a few revisions of note, including downward revisions in Germany to 0.1% from 0.2%, France to 0.2% from 0.4%, Austria to -0.1% from 0.3%, and an upward revision in Ireland to +3.3% from +2.0%. Third-quarter economic growth was driven by personal consumption and business investment primarily, but net foreign demand exerted a 0.7 percentage point drag. Employment growth of 0.2% compared to the second quarter and 0.9% versus a year earlier were unrevised.
Three economic data reports today were announced in Japan. First, nominal average cash earnings posted a year-on-year increase of 2.6% in October (lowest since July) and were unchanged on an inflation-adjusted basis. Second, household spending, which rose 2.9% month-on-month and fell 1.3% versus October 2023, exceeded expectations. And third, October’s index of leading economic indicators slid slightly to a 2-month low, while the index of coincident economic indicators improved to a 5-month high.
Among other European data highlights today, German industrial production defied analyst expectations of a rebound from September’s 2.0% drop and instead fell by a further 1.0% in October, extending the 12-month rate of decline to a woeful 4.5%. The French current account deficit of EUR 2.65 billion in October was 21.5% wider than a year earlier. On-year growth in the British Halifax house price index of 4.8% in November was the most in two years, and Italian retail sales fell 0.5% on month during October but still managed to post the largest year-on-year increase (2.6%) in 15 months.
The preliminary estimate of U.S. consumer sentiment this month according to the U. Michigan/Reuters survey jumped to an 8-month high of 74.0 from 71.8 in November and a recent trough of 66.4 in July.
Canadian November labor market statistics reported today revealed a 0.3 percentage point rise in the jobless rate to 6.8% but also significant growth in jobs (+50.5K) and softer wage inflation of 3.9% after 4.9% in October.
As analysts were expecting, officials at the Reserve Bank of India did not change their 6.50% repo rate at this year’s last scheduled review of monetary policy. the rate has been at 6.5% since a culminating 25-basis point hike in February 2023 after increases totaling 225 basis points during the final eight months of 2022. In keeping the peak 6.5% level, RBI officials revised their projected fiscal 2025 inflation rate slightly higher but also noted slower-than-assumed recent economic growth that elicited a lower projected fiscal 2025 GDP growth figure of 6.6%.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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