US Market Open: Fresh highs ahead of non-farm payrolls
- US non-farm payrolls is the main event in the economic calendar today.
- European markets are largely trading higher today, with the FTSE 100 lagging partly thanks to stronger pound.
- In forex, the dollar and currency pairs such as EUR/USD, USD/GBP and USD/CAD are all in play ahead of jobs data being released.
- In commodities, oil prices continue to climb on optimism about the global economic recovery.
US markets to open at fresh highs
US markets closed at new all-time highs yesterday and are set to open at fresh highs again today.
The S&P 500 is called to open 0.4% higher today at 3890.2 from 3873.8 at the end of play yesterday.
The Dow Jones is set to open 0.4% higher at 31201.0 from 31075.5 at the close yesterday.
The Nasdaq 100 is set to open 0.2% higher at 13606.5 after ending yesterday at 13574.9.
US jobs data: what to expect from non-farm payrolls
Jobs data is in focus today, with non-farm payrolls to be released at 1330 GMT. Expectations are for 60,000 net new jobs in January and for wages to rise by 0.3% month-on-month.
Other jobs data out earlier this week has been positive. Private payrolls increased by 174,000 last month. That was well ahead of the 49,000 additions expected by analysts, according to a poll by Reuters. Plus, the 123,000 fall reported in December was revised to just a 78,000 decline.
You can read our comprehensive guide to non-farm payrolls here.
Our head of research Matt Weller outlines what to expect from the data in our non-farm payrolls preview.
Meanwhile, City Index analyst Fiona Cincotta takes a technical look at the S&P 500 and EUR/USD ahead of the data and looks at how they could be impacted.
Senate passes plans to push ahead with $1.9 trillion stimulus package
President Joe Biden’s plan to introduce a $1.9 trillion stimulus package to help the US economy get back on its feet from the pandemic has inched closer toward approval after the Senate narrowly approved plans that would allow the Democrats to approve the bill without Republican support.
The 50:50 split Senate was torn on the budget plan yesterday but it was ultimately approved after vice president Kamala Harris casted her deciding vote. It is the first time the Democrats have flexed their slim majority in the Senate since winning control last year.
Republicans have claimed the bill is far too costly and has argued it should be scaled back to a much lower level of around $600 billion. Although Biden has said he is willing to compromise in certain areas, such as depriving richer households of stimulus cheques, he has refused to reduce the overall size of the bill.
FDA prepares for rapid reviews of coronavirus booster shots
The US Food and Drug Administration is preparing to conduct rapid reviews of new coronavirus booster shots if new variants prove immune from existing vaccines.
Janet Woodcock, the acting commissioner of the FDA, said new variants could mean people need new vaccines or booster shots to be protected and that the regulator would not require firms to conduct large trials like they did for the original vaccines.
The FDA intends to work out the regulatory framework over the coming weeks but wants to be able to move quickly if needed.
The latest figures from the US shows over 35 million vaccine doses have been administered so far, with over 57 million doses distributed and ready to go.
Biden outlines bold ambitions for US foreign policy
US president Joe Biden has vowed ‘America is back’ in action on the global stage as he outlined the country’s foreign policy plans.
The president noted the threat posed by the likes of China and Russia and covered everything from the US taking strong action on the global climate crisis to nuclear proliferation.
‘American leadership must meet this new moment of advancing authoritarianism, including the growing ambitions of China to rival the United States and the determination of Russia to damage and disrupt our democracy. We must meet the new moment ... accelerating global challenges from the pandemic to the climate crisis to nuclear proliferation,’ Biden said.
Many of his foreign policies aim to repair the damage delivered under former president Donald Trump, who pulled the country out of major international deals and organisations like the Iran nuclear deal, the Paris climate agreement and the World Health Organisation.
On China, Biden said the US will ‘confront China’s economic abuses, counter its aggressive, coercive action to push back on China’s attack on human rights, intellectual property and global governance,’ but also said he was willing to work with the country rather than against it.
European markets trading higher at midday
The Euro STOXX Index traded 0.5% higher at the midpoint of the trading day at 3665.5 from 3646.9 when markets closed yesterday.
France’s CAC 40 was up 0.9% at 5669.5 from 5617.3 at the end of play yesterday.
Germany’s DAX was up 0.2% at 14099.0 compared to 14067.5 at the last close.
Meanwhile, over the Channel, the FTSE 100 was broadly flat at midday at 6509.8 from 6507.3 when markets closed yesterday.
In today’s Top UK Stocks to Watch, Beazley expects to bounce back strongly this year, Syncona’s investment in Achilles could benefit as it considers an IPO, Silence Therapeutics raises funds to help capitalise on current momentum, and energy suppliers like SSE and Centrica rise as Ofgem raises its price cap.
EU regulators join the US over concern about retail trading frenzy
The European Securities and Markets Authority has said it is considering intervening as a surge of interest from social media-driven retail traders continues to cause volatile and wild price movements in the markets, echoing concerns voiced by authorities in the US.
Regulators are now looking into the frenzy, which started in the US and has quickly spread to Asia and Europe, to find out what precisely caused the surge in trading over recent weeks. Data suggests trading by retail investors in French blue-chip stocks rose fourfold last month while overall volumes tripled.
‘We are closely monitoring these new developments and are assessing whether any further supervisory actions are needed,’ said the chair of the European regulator Steven Maijoor.
That comes as US regulators discuss the impact of the surge in interest from retail traders, with Treasury secretary Janet Yellen stating there was a need to ‘understand deeply’ what has happened and why. US authorities are now thought to be trailing online forums to see if there is any evidence of foul play.
UK aims to give first vaccine doses to all priority groups by May
The UK is aiming to give all vulnerable people their first dose of the coronavirus vaccine by May, tightening its delivery schedule.
The previous target was to vaccinate people in the top four of the nine priority groups by the middle of February. That involves vaccinating around 15 million people, with the UK already having administered first doses to over 10.5 million people so far.
The additional five priority groups contain another 17 million people, suggesting 32 million people will have received their first jab by May.
Draghi begins talks to form new Italian government
Mario Draghi, the former boss of the European Central Bank, initiated talks yesterday with politicians from various parties about forming a new government.
Focus is on 5-Star, the largest party in the parliament, as it softened its hostility toward working with Draghi. One of the party’s senior politicians, Luigi Di Maio, said 5-Star had a ‘duty to meet’ with Draghi and to ‘listen and then take a position’.
The entry of Draghi onto the political stage has been widely welcomed as Italians hope he can steer the country through the pandemic and economic recovery, whilst forming a government would also avoid early elections being held.
Draghi is expected to evaluate the state of play over the weekend and whether there is enough support to form a new coalition government. Draghi is also expected to meet with the heads of the country’s leading trade unions to also understand what level of support there is for him to lead a new government.
Forex: Narrow movements
The positive sentiment building around prospects for the US economic recovery this year has supported the dollar lately, while sterling has also continued to perform well as its vaccination programme pulls ahead of most other countries. Meanwhile, the euro continues to struggle as its vaccination programme struggles to pick up speed.
EUR/USD was up 0.2% today at 1.19883 from 1.19640 when markets closed yesterday.
EUR/GBP was a smidgen higher at 0.87548 from 0.87521 at the last close, as it starts to stage a small rebound from hitting its lowest level since May 2020 yesterday.
GBP/USD was up 0.2% at midday at 1.36946 from 1.36716 at the last close, as it bounces back from hitting a two-month low yesterday.
Meanwhile, USD/CAD will be in focus today, with both the US and Canada to release jobs data at 1330 GMT.
Commodities: Oil continues climbing.
Oil prices continue to find higher ground thanks to OPEC+ agreeing to extend supply cuts this year, continued declines in oil stockpiles, and a rosier economic outlook as government’s continue to provide financial support while vaccines are rolled-out.
Brent traded at $59.44 a barrel today, up 0.8% from $59.00 at the close yesterday, while WTI followed higher to $56.78 from $56.41. They both trade at their highest level since January and February 2020, respectively.
The Baker Hughes oil rig count, which provides an insight into how busy drilling activity is in the US, will be released at 1800 GMT.
Gold was trading 0.5% higher today at $1803 per ounce from $1794 when markets closed yesterday.
Silver was up 0.7% at $26.53 an ounce from $26.35 at the end of play yesterday.
Market-moving events in the economic calendar
The headline event today is US nonfarm payrolls published at 1330 GMT, alongside the unemployment rate and average earnings.
The Bank of England’s governor Andrew Bailey will make a speech at 1330 GMT. That will be at the same time as a slew of data comes out of Canada, including unemployment, average hourly wages and the Ivey PMI.