Chill in the air for markets ahead of important US jobs figures

“With the weather having turned from blue skies to snow showers in the matter of a week, there is also a chill in the air for the markets,” says Russ Mould, Investment Director at AJ Bell.

“European markets have frozen still amid concerns about financial pressures on consumers and businesses, and growing concern about a slowdown in global economic activity.

“The fact oil prices are heading southwards will provide some relief to corporates and consumers, but $103 per barrel is still a high price to stomach.

“The big news on Friday is the latest batch of US jobs and wage growth data. This information will be closely watched by the US central bank, the Federal Reserve.

“February saw the addition of 678,000 payroll jobs outside of the farming sector and 5.1% annual wage growth to an average of $31.58 an hour. The market forecast for March is 492,000 new jobs and for wage growth to hit 5.5%. The unemployment rate is expected to have dropped from 3.8% in February to 3.7% in March.

“The Federal Reserve says inflation rather than jobs is now its primary source of concern. Therefore, it is likely to be more interested in wage growth than the headline jobs data, particularly with a view to forming a decision on whether interest rates should go up at its next policy committee meeting on 4 May, and by how much.

“Bond markets have recently been flashing the type of warning signs that have historically come before a recession and so investors will be watching today’s jobs figures like a hawk. Wage growth exceeding forecasts could cause markets to wobble but equally that might encourage the Fed not to be overly aggressive at its next policy meeting.

“Next week’s corporate reporting calendar looks incredibly bare for stocks which means investors will be looking for signals from macroeconomic activity to guide their trading decisions.”

These articles are for information purposes only and are not a personal recommendation or advice.