- MARKET INSIGHTS
- Feb 3, 2023
DAX 40 surged on Thursday despite hawkish ECB tone.
- MARKET INSIGHTS
- Feb 3, 2023
DAX 40 surged on Thursday despite hawkish ECB tone.
The labor market continues to exhibit strength in the face of broader economic challenges, as evidenced by the latest employment report from the Labor Department. In December, nonfarm employment recorded a robust increase of 223,000 jobs, surpassing analysts’ expectations and unemployment declining to a 50-year low of 3.5%.
However, it’s important to note that the impressive unemployment rate is accompanied by a moderating wage growth, sparking speculation that the Federal Reserve may shifts away from its aggressive monetary policy stance.
The tight labor market conditions, as indicated by the recent drop in weekly jobless claims and the smaller-than-expected decrease in jobs openings, which suggests that the Fed is likely to continue to raise interest rates in the near term. The number of unemployed persons decreased by 278,000 to 5.72 million in December, and the number of employed individuals increased by 717,000 to 159.2 million.
Although the U.S. payrolls report showed labour market have remained tight, readings on wage growth and a surprisingly sharp downturn in service sector business confidence last month encouraged those betting on an early peak in Federal Reserve interest rates this year.
Softening average hourly earnings also contributed to a rally in stocks, as investors believe that the unemployment rate is less critical for the Fed if wage growth is moderating. This had led to expectations of a 25-basis point increase in the Fed’s benchmark interest rate at the next policy meeting on 1st of February.
This economic data also fuels the speculation of further Federal Reserve rate hikes in the near term, with Fed futures predicting a total of 60 basis points by mid-year, and a half point of rate cuts over the second half of 2023, despite Fed officials not foreseeing rate cuts in 2023.
However, inflation data due on Thursday, and the start of corporate earnings season on Friday, will provide a more comprehensive understanding of the economy’s health and potential for slowdown. The underlying market indication is that the U.S. economy is heading towards a steady state, and it’s a perfect time for investors to keep an eye on the next step of monetary policy, and the impact of inflation on the economy.
The data paints a picture of a labor market that is defying broader economic headwinds and demonstrating remarkable resilience. Investors are raising questions about the Federal Reserve monetary policy, making it an essential time to keep a keen eye on the economy and upcoming data releases.
Source: Tradingview
The economic calendar this week is poised to be dominated by the release of inflation data for December and the onset of the fourth quarter earnings season. Inflation data for December will provide valuable insights and could influence the size of the Federal Reserve’s next rate hike, while corporate earnings will give an important insight into the health of the economy amid concerns over a potential slowdown.
Investors will be closely monitoring the release of Q4 earnings reports from companies, as they seek to discern any signs of a potential economic slowdown and its impact on bottom lines. Several investment houses have recently indicated that further downward revisions to 2023 EPS forecasts are likely to come. Investors should be vigilant as the Q4 reporting season rolls in, as it would provide a good picture of the state of the economy and could put a lid on the current rally.
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Violeta è entrata a far parte di Leverage Shares nel settembre 2022. È responsabile dello svolgimento di analisi tecniche e ricerche macroeconomiche ed azionarie, fornendo pregiate informazioni per aiutare a definire le strategie di investimento per i clienti.
Prima di cominciare con LS, Violeta ha lavorato presso diverse società di investimento di alto profilo in Australia, come Tollhurst e Morgans Financial, dove ha trascorso gli ultimi 12 anni della sua carriera.
Violeta è un tecnico di mercato certificato dall’Australian Technical Analysts Association e ha conseguito un diploma post-laurea in finanza applicata e investimenti presso Kaplan Professional (FINSIA), Australia, dove è stata docente per diversi anni.
Oktay è entrato a far parte di Leverage Shares alla fine del 2019. È responsabile della crescita aziendale, mantenendo relazioni chiave e sviluppando attività di vendita nei mercati di lingua inglese.
È entrato in LS da UniCredit, dove è stato responsabile delle relazioni aziendali per le multinazionali. La sua precedente esperienza è in finanza aziendale e amministrazione di fondi in società come IBM Bulgaria e DeGiro / FundShare.
Oktay ha conseguito una laurea in Finanza e contabilità ed un certificato post-laurea in Imprenditoria presso il Babson College. Ha ottenuto anche la certificazione CFA.