US open: Stocks to open higher after ambiguous NFP report

Headline NFP report number disappoints coming in at less than half of what is expected. However, unemployment drops significantly to 4.2% and the participation rate rises.

USA (2)

US futures

Dow futures +0.15% at 34700

S&P futures +0.25% at 4590

Nasdaq futures +0.47% at 16067

In Europe

FTSE +0.48% at 7160

Dax +0.4% at 15333

Euro Stoxx +0.3% at 4121

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NFP payroll is half of what was expected

US stocks are set for stronger start after a very mixed non-farm payroll report. The headline number disappointed coming in at half of what was expected.

US non-farm payrolls came in at 210k well below the 531k expected. However, unemployment rate ticked lower to 4.2% well below the 4.6% and the participation rate improved.

The disappointing headline number sparked a jump in equities and a drop in the US Dollar as expectations eased of a Fed hike. However, that move is starting to unwind slightly because beyond the disappointing headline number, which could be owing to seasonality quirks, the rest of the report is actually pretty strong and is unlikely to deter the Fed from its hawkish turn earlier in the week.

Where next for the S&P 500?

The S&P500 has extended its rebound from 4500 around the 100 sma and has retaken the 50 sma and September high at 4550 a key level. Buyers will now be looking for a move over 4600 round number and falling trendline support in order to look ahead to 4630. Sellers would need to break below 4550 in order for more losses to be on the cards snd expose the 100 sma at 4500.

S&P 500 chart

FX – USD falls post NFP

The USD is a few pips lower after the mixed message non farm payroll. The USD initially dropped on the report. However, it has started to pare those losses as investors don’t consider that it will put the Fed off tightening policy.

EUR/USD is moving a few pips lower after a mixed bag of data. Whilst on the one had retail sales rise by more than expected at 1.4%, despite inflation hitting a 30 year high, on the other hand the composite pmi for the bloc was revised slightly lower to 55.4, down from 55.8 in the preliminary reading.

Separately the  AUD is falling lower and it set to be one of the worst performing G10 currencies this week as fears over Omicron hurt demand for the riskier currency.

GBP/USD -0.37% at 1.3271

EUR/USD -0.03% at 1.1297

 

Oil rises post OPEC

Oil prices are on the rise on Friday at the end of a volatile week which is set to see oil end the week at roughly the same level that it started the week. Oil has fallen across the past 5 consecutive weeks.

Oil is on the rise after OPEC+ agreed to continue with plans to raise production by 400,000 barrels per day in January. However, the oil cartel calmed the markets’ nerves by saying that it could reconsider and review its decision at short notice should oil demand collapse owing to more COVID lockdowns.

So far there have been no signs of decreased mobility owing to the spread of Omicron, according to JP Morgan.

WTI crude trades +2.5% at $68.30

Brent trades +2.65% at $71.60

Learn more about trading oil here.

 

Looking ahead

14:45 Markit Composite PMI

15:00 Factory Orders

15:00 ISM Services PMI

 

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