Markets Update Friday 08/10/2021 – Paradox

Frankfurt – 08/10/2021

Paradox

On Friday, the eagerly awaited September labour market data did not provide Wall Street with any pronounced directional impulses. An unemployment rate at an annual low and new jobs also created at an annual low do not really go together. As a result of the report, the Fed will probably continue to adopt a wait-and-see attitude. 

US Markets at a glance

Wall Street was cautious on Friday. The Dow Jones index started the day virtually unchanged, hovering around the zero line before closing 0.03 per cent lower at 34,746.25 points. In addition, the tech index NASDAQ Composite fell by 0.51 per cent to 14,579.54 points, whereas it had initially risen.

The latest labour market report for September contained both light and shade. Although the unemployment rate fell surprisingly significantly, on the other hand, employment increased much more weakly than expected. Whether this data will now prompt the US Federal Reserve to rethink its monetary policy plans seems questionable.

Far East Markets at a glance

Asia’s main markets turned green on Friday. In Japan, the Nikkei index rose by 1.34 per cent to 28,048.94 points. On the Shanghai stock exchange, trading resumed today for the first time after the holiday break, also known as the “Golden Week”. The Shanghai Composite finally rose by 0.67 per cent to 3,592.17 points. In Hong Kong, the leading index Hang Seng finally gained 0.55 per cent to 24,837.85 units before the weekend.

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After hope had already begun to germinate on the markets in the Far East the previous day, investors again ventured out of their hiding somewhat on the last day of the trading week. 

European Markets at a glance

The European stock markets moved into the loss zone today. The EuroSTOXX 50 started with a marginal loss and increased this in the further course of trading, closing 0.61 per cent lower at 4,073.29 index points.

On the Frankfurt stock market, the DAX opened with a marginal loss and then extended this slightly. In the end, it closed before the weekend 0.29 per cent weaker at 15,206.13 points. The TecDAX was down more significantly, ending the day 0.87 per cent lower at 3,587.70 points.

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Even after the new US labour market data, investors continue to puzzle over the future monetary policy of the US Federal Reserve. “To be sure, the unemployment rate fell to its lowest level in the post-crisis era at 4.8 per cent. At the same time, however, new job growth is the lowest it has been this year,” the DPA quoted a market observer as saying. Thus, the US labour market did not provide the Fed with any convincing arguments for a departure from crisis mode.

Meanwhile, the fact that the US Senate approved an increase in the debt ceiling until the beginning of December, thus averting default, was received slightly positively.

Forex, gold, oil and crypto

The euro moved little on the foreign exchange market on Friday. Shortly after the US labour market data announcement, the euro rose to its daily high of 1.1589 US dollars and was still able to hold 1.1577 dollars at the close of trading. 

Oil prices rose significantly on Friday and at times reached multi-year highs. At last count, a barrel of North Sea Brent cost 83.08 US dollars, 1.13 dollars more than on Thursday. At $83.43, Brent was at times at its highest level since November 2018, while US WTI light crude was up $1.47 at $79.77. At $80.11 at times, the WTI price had risen above $80 for the first time since November 2014.

The price of gold spiked to $1,781 per troy ounce intraday before coming back down and closing almost unchanged at $1,756.

Many of the most important digital assets consolidated somewhat today after the strong rise previously. Bitcoin remained almost unchanged at around $54,000. Intraday, the most prominent digital asset, rose close to $56,000. Altcoins such as Ethereum, Cardano, XRP and Polkadot slid by approximately 2 per cent, while Solana was able to make up some ground, rising 1.2 per cent to $160. The biggest daily gainer was Shiba Inu, making up for some of yesterday’s losses and climbing 18 per cent today. 

Corporate and world economic news

Economic data

The series of export increases of the German economy has broken after 15 months. In August, exporters sold 1.2 per cent less abroad than in the previous month, as reported by the Federal Statistical Office. Economists polled by Dow Jones Newswires had expected a plus of 0.5 per cent. Compared to August 2020, exports were 14.4 per cent higher. Shortages of materials and bottlenecks in supply chains, which also affect exports, maybe behind the monthly decline. Imports rose by 3.5 per cent in August compared to the month of July. Over the year, there was an increase of 18.1 per cent.

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The corona crisis and the tight labour market slowed US job growth in September. As reported by the US Department of Labour, only 194,000 additional jobs were created in the private and government sectors. Economists interviewed by Dow Jones Newswires had expected an increase of 500,000 jobs. The separately collected unemployment rate fell to 4.8 from 5.2 per cent in September, while economists had expected a drop to 5.1 per cent. For this statistic, private households are surveyed, whereas companies and public authorities are surveyed for the employment rate.

The so-called labour force participation rate – the share of the labour force in the total working-age population – was little changed at 61.6 per cent. US hourly wages rose 0.6 per cent from the previous month to 30.85 dollars. Economists had forecast an increase of 0.4 per cent. Year on year, wages were 4.6 per cent higher.

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