U.S. futures contracts fall ahead of upcoming non-farm payrolls data – January 5 market report

Investment Network

New York stock futures fell as investors prepared for the release of a closely watched U.S. jobs report for December.

1. The upcoming non-farm employment data

The U.S. economy is expected to add fewer jobs in December than last month, but will still maintain steady growth.

Economists estimate the U.S. grew by 170,000 last month, down from 199,000 in November, with monthly growth expected at 0.3%, down slightly from zero (4%) previously. Meanwhile, it is expected to be 3.8%, up from 3.7%.

A flurry of data earlier this week pointed to a vibrant employment outlook. Private employer hiring far exceeded expectations in December, with job vacancies falling to their lowest level in nearly three years.

Even so, labor demand is already showing some signs of softening under the pressure of the Federal Reserve’s unprecedented policy tightening campaign, which has pushed interest rates to 22-year highs. But if the slowdown continues to be gradual, it would bode well for a so-called “soft landing” — a scenario in which the Fed seeks to beat inflation without causing the overall economy to collapse.

2. Futures contracts fell slightly

U.S. stock futures fell on Friday as investors prepared for the release of the all-important jobs report.

As of 05:07 ET (10:07 GMT), the contract was down 88 points, or 0.2%, down 11 points, or 0.2%, and down 47 points, or 0.3%.

The index fell 0.3% in Thursday’s trading session and fell 0.6% as Wall Street continued its subdued start to the new year. Only 30 stocks in the three major indexes ended in the green, rising 0.03%, partly due to strong performance by financial stocks.

Weak sentiment dampened hopes the Federal Reserve would cut interest rates as early as 2024. While the Fed’s interest rate outlook last month was more dovish than previous forecasts, minutes from the Fed’s meeting released this week showed policymakers believed borrowing costs were likely to remain high “for some time.” “

3. Golden weekly decline

Gold prices fell in European trading on Friday, while the dollar strengthened after falling below key levels this week.

It was down 0.3% at $2,037.79 per troy ounce and was down 0.3% at $2,044.25 per troy ounce as of 05:09 ET. Both instruments fell between 0.8% and 1% for the week.

Recent bets that rate cuts could begin as early as March 2024 have been scaled back, boosting the dollar. The dollar is on track to gain more than 1% on a weekly basis, its best level since July 2023.

ING analysts said: “The beginning of the year poured cold water on optimism about a rate cut in March, and we maintain our view that the first rate cut will be in May.”

4. Crude oil prices tend to rise on a weekly basis

Oil prices edged higher on Friday, in part due to concerns that recent unrest in the Middle East could lead to supply disruptions.

As of 05:09 ET, futures prices were up 1.0% at $72.92/barrel, while the contract was up 0.8% at $78.19/barrel.

Both are expected to rise about 1% in the first week of the year. Attacks on Red Sea ships by Yemen’s Iran-backed Houthi rebels have raised concerns about the flow of supplies through a key trade route between Europe and Asia.

But gains were limited as data showed U.S. petroleum products inventories rose sharply in the final week of 2023. Data shows demand in the world’s largest oil consumer remains weak.

5. Apple supplier Foxconn warns first-quarter revenue will fall

Foxconn, a major assembler of Apple’s (NASDAQ: {6408|AAPL}}) flagship iPhone smartphone, warned that it expects first-quarter revenue to fall year-on-year due to weaker demand than in the previous three years. month period.

The Taiwanese group, formally known as Hon Hai Precision Industry Co., said in a statement that first-quarter results were strictly compared to revenue in the first three months of last year. Driven by the return of factories to normal operations after the epidemic. The company did not provide specific numerical guidance.

The announcement comes after sluggish customer demand led to a decline in fourth-quarter revenue at Foxconn’s smart consumer electronics unit.

Concerns about iPhone demand prompted two analysts to downgrade Apple stock this week, putting pressure on the tech giant’s shares. However, Apple remains the world’s most valuable company.