Article / 02 February 2018 at 8:00 GMT

Morning Markets: Eyes on NFP as equities wither and yields steady

Senior Editor / Saxo Bank
Denmark

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Watchlist

  • EU: PPI (10:00 GMT)
  • US: Employment report (13:30 GMT)
  • US: University of Michigan survey of consumers (15:00 GMT)
  • US: Nonfarm payrolls (13:30 GMT)

Financial markets are looking to this afternoon's US nonfarm payrolls for directional impulse after equities wilted overnight and the global bond selloff paused. In equities, focus today will be on tech stocks after Apple's reported disappointing iPhone sales in its quarterly earnings report.


The nonfarm payrolls are expected to show only slight changes from December with the headline number of new jobs added to the US economy expected to rise by just 2,000 to 150,000 for the month of January. Private payrolls are forecast to edge down from 146,000 to 145,000 and the key average hourly earnings figure is seen rising 0.20%, down from the previous month's 0.30% advance.


Elsewhere, the still-weak dollar is helping crude oil to maintain its bullish momentum despite a sharp rise in US production and bulging stockpiles there too. 


And there's another twist in the Brexit story, this time a potential game-changer – in a scoop from Shanghai, the FT's political editor, George Parker, reports that UK officials are considering "whether Britain could strike a customs union deal covering trade in goods with the EU, a move that would severely limit the UK’s ability to strike out on its own." This news comes as a group of British europhiles have decided to put party political differences aside and work together to allow a second referendum on the final divorce deal.


Market signals

Asian session

  • US stocks and Treasuries fell in tandem overnight on the threat of Fed rate rises
  • South Korea's Kospi Composite was down 1.66% to 2,525.88 at 06:23 GMT
  • Japan's Nikkei 225 retreated; it was down 0.90% to 23,274.53 at 06:15 GMT
  • Japanese government bond (JGB) prices recovered from early losses
  • The recovery came after the BoJ offering “unlimited” buying in long-term JGBs
  • The Shanghai Composite fell and rebounded; it was up 0.28% to 3,456.74 at 06:41 GMT
  • Bitcoin slumped to its year low after it lost more than $44bn in market value in January
  • News about India potentially cracking down on cryptocurrencies was a factor
  • Crude rose on a survey that showed compliance with Opec's production curbs
  • Apple's revenue forecast for the second quarter was below market expectations
  • Deutsche Bank has been fined for attempting to rig the benchmark rate
  • The S&P/ASX200 closed up 0.51% at 6,121.40, thanks to gains for banks and top miners
  • New home prices in NZ fell 9.6% in December 2017, reversing a 9.6% rise in November

Forex ahead

  • The USD traded mixed against other major currencies ahead of the nonfarm payroll data
  • The fragile Aussie dollar held just above 0.80; it was worth 0.8002 at 06:25 GMT

From the Floor


Greenback blues "The dollar is still weak even as the entire US yield curve is lifting," says Hardy.


iPhone fatigue? "Sales by volume fell 1% y/y but good uptake of iPhone X," says Garnry.


Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

Crypto crackdown
Following a miserable January Bitcoin fell as much as 11% to $8,915, the lowest since November, in part on concerns India may crack down on cryptocurrencies, writes Saxo's Sydney trading team.

Overheating fears
Despite the release of subdued inflation readings from the Eurozone, there are overheating fears for the single currency area, explains Max McKegg.

Yields hit shares
The Asian market was hit in early trade by the rising yields in US treasuries, an environment that  shares simply don't enjoy, says the team at Saxo APAC Sales Trading.


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Techno tumble ... After soaring as high as $19,511 last month, the cryptocurrency Bitcoin has
now tumbled to less than half of its peak value. Photo: Shutterstock

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