Yazar: Geoffrey Smith
Investing.com – Selling on US bonds is reverberating in global markets, but Wall Street expects a modest increase at the opening. Non-farm payroll data is expected to increase from January levels; OPEC’s decision not to increase production prompted oil to rally and analysts raised their forecasts. And China set a lower-than-expected target for GDP growth this year.
Here’s what you need to know in financial markets on Friday, March 5th.
1. Powell’s comments put pressure on global markets
US bond sales were triggered by Fed Governor Jerome Powell’s speech on Thursday, but European markets bounced back after a weak opening.
Powell reiterated that the Fed will not be in a hurry to tighten monetary policy unless there is significant progress in reducing unemployment. With their comments, they went up to 1.55% and 30-year-olds up to 2.35%. Both retreated afterwards, but rates increases pose a clear threat to the trend towards mortgage refinancing. 30-year mortgage rates surpassed 3% on Thursday.
Powell pointed out that as long as markets remain “regular,” the Fed will not be affected by increased returns. Although there are stress pockets in repo markets with the rush to short-term Treasury returns, this is the case for now.
2.China’s low growth target
China has set its growth target for 2021 at a rate below expectations.
At the Annual National People’s Congress, a meeting where annual economic priorities are determined, Prime Minister Li Keqiang aimed at 6% GDP growth. The rate estimated by the IMF in the last World Economic Outlook was 7.9%.
The figures reveal that Beijing wants to withdraw some of the strong incentive measures it enacted last year, given the sharp increase in public and private debt over the past 12 months. The country’s top banking supervisor warned just last week about the bubbles in the markets, including the real estate market.
Base metal prices rebounded after falling sharply on Thursday.
3. Stock markets will open with a moderate increase; eyes on Broadcom, Gap and Costco
US stocks will open with a moderate increase after new losses on Thursday, but investors will avoid pushing too hard at the opening: this week’s pattern is that bright openings will almost instantly turn to heavy sales.
It increased by 81 points and rose by 0.2%. The top selling this week and finishing with a nearly three-month low on Thursday gained 0.1%.
Among the stocks that may be in the spotlight are Broadcom, Costco and Gap, whose quarterly reports exceeded expectations.
4. Employment growth will strengthen again
Action on stocks and bonds is likely to be weak, at least until the monthly labor market report is released.
Analysts expect the US economy to create 182,000 jobs in the month through mid-February. This will be the second consecutive monthly progress in hires. However, analysts will also look at the labor force participation rate. This rate dropped to its lowest level since June in January, as discouraged employees stopped looking for work.
On Thursday, the day before these reports, there was a small increase in weekly unemployment claims. This masked a 1 million drop in the total number of applicants for unemployment benefits.
At the same time, February figures for the US trade balance will be released.
5.Oil continues to increase after OPEC + ‘decision
Analysts were hasty to update their price forecasts after OPEC + decided to continue cutting production in April, with prices reaching their highest level since January 2020.
This decision means that if the Northern hemisphere economy continues to reopen after the winter increase in Covid-19 cases, the decline in global stocks may accelerate. Citigroup (NYSE 🙂 now expects its prices to reach $ 70 by the end of the month, while Goldman Sachs (NYSE 🙂 analysts predict it will see $ 80 in the third quarter of the year.
Strong demand for oil and gas shares continued with this news. Shares of a group of European giants and oilfield service companies saw a 13-month high on the European morning.
The OPEC + decision will sprinkle Baker Hughes tower census data. Because the OPEC decision points out that there will not be a recovery in the US shale oil in the near future.