Skip navigation Scroll to top
Scroll to top

LGT Navigator: Hoping for a weak US jobs report?

October 7, 2022

Before this afternoon's upcoming monthly labor market report from Washington, most investors exercised restraint after the strong movements in the first half of the week. The Federal Reserve is strongly oriented in its monetary policy to the development of the labor market and continued robust job growth would justify further interest rate hikes. Therefore, bulls on the stock market are likely to some extent hoping for a weaker-than-expected labor market report, which could move the Fed to a possibly more moderate course. Given the inflation trend, this seems a very vague hope.

Hoping for a weak US jobs report?

Analysts' average estimate is that the overall US economy (excluding the agricultural sector) added 250'000 jobs in September. However, this would have meant that employment growth slowed considerably compared with the previous month. In August, the first calculation reported an increase of 315'000 jobs.

Inflation fears and rising yields put stock markets under pressure again

On Wall Street, stock indices again came under pressure on Thursday. Rising oil prices following the Opec+ production cut, which was sharply criticized by the US, and the prospect of a possibly continuing solid US labor market point to an unchanged pace of the Fed's interest rate policy. Recent statements by Federal Reserve officials reinforced this assumption. The fight against inflation seems far from being won. The Dow Jones Industrial fell -1.15% to 29'926.94 points and the broad S&P 500 fell -1.02% to 3'744.52 points. On the Nasdaq, the indices closed about -0.75% lower than the day before. In the bond market, the yield of ten-year US government bonds climbed to 3.82%, back towards the 4% mark.

Stock markets in the Asia-Pacific region weakened at the end of the week ahead of the US labor market report. In Tokyo, the Nikkei 225 trades around -0.6% lower and in Hong Kong, the Hang Seng index fell -1.1%, with the Hang Seng Tech index losing around -2.8%. MSCI's index of Asia-Pacific equities outside Japan was down around -1%. China's stock markets also remained closed on Friday for the “Golden Week” holiday.

ECB minutes reiterate need for further rate hikes

The Governing Council of the ECB, on the last monetary policy direction decision on September 8, feared that the rapid rise in inflation in the euro area could become entrenched. Inflation was far too high and likely to remain above the Governing Council's target for an extended period, the ECB noted in its minutes published yesterday. As a result, the ECB had raised key interest rates sharply by 75 basis points. It said the expected slowdown in economic activity would not be enough to bring inflation down significantly, which would have to result in further interest rate steps. The ECB's next interest rate decision is scheduled for October 27.

Economic Indicators October 7

MEZ Country Indicator Last period
07:45 SZ Unemployment Rate (September) 2.1%
08:00 GE Import Prices (August, y/y) +28.9%
08:00 GE Retail Sales (August, m/m) +1.9%
12:00 EZ EU State and Government heads meeting
14:30 US Unemployment Rate (September) 3.7%
14:30 US Non-Farm Payrolls (September)  +315,000
14:30 US Average Hourly Earnings (September, m/m) +0.3%

 

Earnings Calender October 10

Country Company Period
AUT OMV Q3 Sales
ES Repsol Q3 Sales

 

LGT helps you make informed investment decisions

All about global economic and market trends at a glance

Subscribe to LGT's research newsletters

You can also follow us on Facebook or LinkedIn – or visit MAG/NET and discover interesting background articles. If you have questions, a consultant from the bank will be happy to help you.

 

Imprint
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, E-Mail: lgt.navigator@lgt.com
Source: LGT Bank (Switzerland) Ltd.

 

Risk Disclosure (Disclaimer)
This publication is an advertising material / marketing communication. This publication is intended only for your information purposes. It is not intended as an offer, solicitation of an offer, or public advertisement or recommendation to buy or sell any investment or other specific product. The publication addresses solely the recipient and may not be multiplied or published to third parties in electronic or any other form. The content of this publication has been developed by the staff of LGT and is based on sources of information we consider to be reliable. However, we cannot provide any confirmation or guarantee as to its correctness, completeness and up-to-date nature. The circumstances and principles to which the information contained in this publication relates may change at any time. Once published information is therefore not to be interpreted in a manner implying that since its publication no changes have taken place or that the information is still up to date. The information in this publication does not constitute an aid for decision-making in relation to financial, legal, tax or other matters of consultation, nor should any investment decisions or other decisions be made solely on the basis of this information. Advice from a qualified expert is recommended. Investors should be aware of the fact that the value of investments can decrease as well as increase. Therefore, a positive performance in the past is no reliable indicator of a positive performance in the future. The risk of exchange rate and foreign currency losses due to an unfavorable exchange rate development for the investor cannot be excluded. There is a risk that investors will not receive back the full amount they originally invested. Forecasts are not a reliable indicator of future performance. In the case of simulations the figures refer to simulated past performance and that past performance is not a reliable indicator of future performance.

The commissions and costs charged on the issue and redemption of units are charged individually to the investor and are therefore not reflected in the performance shown. We disclaim, without limitation, all liability for any losses or damages of any kind, whether direct, indirect or consequential nature that may be incurred through the use of this publication. This publication is not intended for persons subject to a legislation that prohibits its distribution or makes its distribution contingent upon an approval. Persons in whose possession this publication comes, as well as potential investors, must inform themselves in their home country, country of residence or country of domicile about the legal requirements and any tax consequences, foreign currency restrictions or controls and other aspects relevant to the decision to tender, acquire, hold, exchange, redeem or otherwise act in respect of such investments, obtain appropriate advice and comply with any restrictions. In line with internal guidelines, persons responsible for compiling this publication are free to buy, hold and sell the securities referred to in this publication. For any financial instruments mentioned, we will be happy to provide you with additional documents at any time and free of charge, such as a key information document pursuant to Art. 58 et seq. of the Financial Services Act, a prospectus pursuant to Art. 35 et seq. of the Financial Services Act or an equivalent foreign product information sheet, e.g. a basic information sheet pursuant to Regulation EU 1286/2014 for packaged investment products for retail investors and insurance investment products (PRIIPS KID).