The US Bureau of Labour Statistics reported a non-farm payroll number on Friday that surpassed market estimation, with a total of 196k non-farm employment added to the job market in March.
This reading proved that February’s unusual low employment data might be an outlier, due to cold weather and government shutdown disruptions. Average hourly earnings rose only 0.1 percent on a month-to-month basis, below the 0.3 percent forecast. The unemployment rate remains unchanged at 3.8%, in line with expectations.
Although the overall reading is upbeat, details suggest weakness in the manufacturing sector remain. It is worth noting that the manufacturingsector lost 6k jobs last month, registering the worst record of such readings since Aug 2016. This came with a backdrop of a synchronized global economic slowdown, and impending auto tariffs may further inhibit hiring in the automobile manufacturing industry.
The likelihood of rate cuts by end of 2019, according to CME’s FedWatch tool, remains at over 50%. This suggests that the market’s view of easing monetary policy has not been changed by the improving jobs number. This Wednesday’s US CPI reading may paint a clearer view on the inflation outlook. A substantially higher reading will likely be a dollar-booster whereas a lower-than-expected reading will likely be the opposite.
The S&P 500 index moved higher on Friday, extending its rally since end December in an attempt to breakout its record high. Immediate resistance can be found at around 2,940 point. Sector wise, energy (+1.69) was leading the gain due to rising crude oil prices. Utilities (+1.0%), Real Estate (+0.76%) and healthcare (+0.70%) were also among the outperformers whereas Materials (-0.05%), communication services (+0.04%) and financials (+0.09%) were trailing.
Brent crude oil prices moved up higher on Monday to US$ 71.2, backed by concerns of a supply disruption in Libya. Higher oil prices will provide support to Singapore’s offshore & marine sector.
China equity market will resume trading today following a long weekend. With year-to-date gain of 30% in Shanghai Composite and 40% in Shenzhen Composite, they are among the best performing markets in the world this year. Investors are curious about how long this rally could sustain even though the fundamental metrics have not come out of the woods yet. With policy and liquidity driven characteristics, China A-shares are known to be irrelevant to the economic cycle. Technically, the China A50 index has broken out its SuperTrend (10,3) and moved higher, suggesting the upward momentum is picking up again.
This week, several key economic data will be revealed:
- US factory orders (Monday) will impact dollar and US equities
- China M2 and new yuan loans (Wed) will impact CNH and equities in HK, China
- ECB interest rate decision (Wed) on Euro, European equities, gold
- US DoE Crude Oil stocks (Wed) will impact crude oil prices
- Singapore’s 1Q GDP advanced readings (Fri) will impact Singapore stocks
- China trade balance (Friday) on Asian equities, AUD
S&P 500 Index
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