Signs that the Labour market is improving in the USA combined with encouraging earnings figures helped drive leading US equity indices to near-record highs during Thursday’s New York session.
The weekly jobless claims number came in below Reuters forecast of 830K at 779K, the third week in a row the claims number has fallen. Continuing claims were 4.592 million, falling from 4.785 million.
The latest earnings data delivered by Ebay, PayPal, and Philip Morris beat the forecasts. Combined with the better-than-expected unemployment claims, factory orders beating the estimates, and vaccine rollouts gathering momentum, Wall Street experienced a risk-on session.
NASDAQ 100 approaches 13,600 round number
At 18:30 UK time on Thursday, February 4 the SPX 500 traded up to 0.83%, and the DJIA was 0.84% up. The NASDAQ 100 was up 0.79% and up 4.81% year-to-date. At 13,509 the tech index is close to the 13,600 round number handle and the record high just above that level.
The dollar index DXY continued the bullish trend observed during February. Although the index is up 0.4% and trending above the 90.00 level at 91.53, the currency basket is down -6.87% yearly. Since May 2020, the last time the 100.00 level got tested, the index has fallen by close to 10%.
USD records gains versus EUR based on euro weakness, not USD strength
Versus several peers, USD recorded gains during Thursday’s sessions. EUR/USD slumped through several support levels to breach S3 trading down -0.65%. Euro weakness was evident across the board, EUR/GBP also collapsed through S3, to trade at 0.875, a level not witnessed since May 2020.
The euro collapse occurred in direct contrast to the gains recorded by Germany’s DAX and France’s CAC on the day, which closed 0.82% and 0.79% up respectively.
After filing a dismal services PMI for the UK during Wednesday’s session of 39.9, the Markit construction PMI for the UK missed the 52.9 forecasts coming in at 49.2.
UK Bank of England predicts -4% GDP for Q1 2020
The UK Bank of England announced the base rate would remain at 0.1% while delivering an inflation report suggesting no appetite to invoke a negative rate over the short term.
During its press conference, the UK central bank officials predicted a -4% GDP fall in Q1 due to the UK lockdowns since November 2020. The latest Q4 GDP metric will get published on Friday, February 12, the expectation is -2.2%, with annual GDP for 2020 at -8%, which would represent one of the worst COVID-19 recession figures in the G20.
Crude oil rises, precious metals lose ground
WTI oil continued its recent momentum trend upwards during Thursday’s sessions. At 19:30 UK time, the commodity traded at $56.24 per barrel up 0.99% on the day and up 15.97% year-to-date.
Silver fell by -1.94% on the day to trade at $26.36 per ounce, sliding by close on 10% since setting an eight-year high earlier in the week. Gold is down -8.13% monthly and traded down -2.12% during the day’s sessions at $1794 per ounce crashing through S3 to print a low not seen since early December 2020.
Calendar events scheduled for Friday, February 5 that could move markets
Germany’s factory orders are forecast to reveal a dip of -1.2% for December 2020, a result that could move the price of EUR versus its peers. According to agency forecasts, UK house prices have risen by 0.2% in January.
North American data dominates the afternoon session, Canada’s latest unemployment figure should come in at 8.7% with the participation rate remaining at 65%. The forecast for Canada’s December’s balance of trade is -$3.2b, a modest improvement from the previous figure. The Canadian dollar could fluctuate as the data are published.
The second NFP figures of 2021 get published before the New York session, which could set the tone for trader and investor sentiment. 140K jobs became removed from the employment roll in December, and the anticipation is 45K added in January. Although a dwindling number in comparison to the months before the pandemic ripped through the United States, investors might take any positive number as low as 45K as evidence that the US is beginning to turn the economic corner.
