Market Wrap: 6 July 2023

Market Wrap: 6 July 2023

Stocks Fluctuate as Traders Brace for US Jobs Data: 

  • Investors look to payrolls, unemployment numbers for Fed clues
  • Alibaba surges on report China to unshackle Ant with fine

Stocks were subdued as investors prepared for another round of US jobs numbers to gauge if they will back new bets for more Federal Reserve interest rate hikes.

Shares in Europe erased early declines, but were still on course for their worst week since the middle of March. US equity futures steadied after Thursday’s losses in the S&P 500 and Nasdaq 100 benchmarks sparked by stronger-than-expected private hiring data. 

In corporate news, Just Eat NV shares slumped after analysts at Exane and JPMorgan Chase & Co. turned bearish on the food-delivery company. Persimmon Plc was among UK homeowners trading lower after Halifax said house prices are falling at their fastest annual pace since 2011. 

Alibaba Group Holding Ltd. rose in US premarket trading, tracking gains in Hong Kong after Reuters said Chinese authorities will wrap up a probe on Ant Group Co. as soon as Friday with a fine of more than $1.1 billion, capping years of scrutiny over the fintech giant. 

Traders added to wagers of more rate hikes as ADP Research Institute data on Thursday showed US companies added the most jobs in more than a year in June. Friday’s US nonfarm payrolls and unemployment reports will be key to any more revisions in rate-hike expectations after the ADP numbers prompted a spike in Treasury yields.

“One thing is for certain: given yesterday’s moves, a mild upside surprise is already in the price,” Julien Lafargue, chief market strategist at Barclays Private Bank, said in a note. “Should the NFP send a similar message as the ADP figure, the market will gain confidence that the well-anticipated recession is being pushed back and that the Fed may need to be more aggressive.”

Treasury yields ticked higher again in Friday trading, with the policy sensitive two-year yield near 5%, while the 10-year hovered close to the highest since March.

Swap contracts linked to the Federal Reserve’s future policy decisions almost fully price in a quarter-point interest-rate hike by July 26 and show a growing likelihood of an additional move by year-end. This expectation for higher rates is reinforcing bets on tighter monetary policy globally as central banks struggle to rein in inflation.

Dallas Fed President Lorie Logan voiced her concerns on Thursday that inflation was still running too hot and more tightening was needed. Policymakers elsewhere share that view, with European Central Bank President Christine Lagarde saying there is still “work to do” to bring inflation under control.

In Asia, US Treasury Secretary Janet Yellen held informal talks with China’s former Vice Premier Liu He and the People’s Bank of China governor Yi Gang as she began two days of talks designed to stabilize fraught ties between the two superpowers.

Investors also remained on the lookout for any stimulus decision by the Chinese government after Premier Li Qiang pledged to “spare no time” in implementing a batch of targeted policies to strengthen the country’s economic recovery.


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