Wall Street opens on a positive note after private sector employment data reinforced speculation that the Fed sees enough signs of a slowdown in the economy or labor market to end its monetary tightening and start cutting interest rates early next year. In pre-market trading, the S&P is trading 0.35% higher after two negative sessions.
However, the impact of the weaker than expected ADP labor market data was limited, although yields rose in pre-market trading and are now flat again or showing signs of falling further.
Private sector employment rose by 103,000 last month and was revised down in October. Economists had expected a gain of 130,000 jobs in the private sector. However, the ADP report comes just two days before the NFP report, which will also show more details on the labor market, including wage growth and the unemployment rate.
Markets are still very optimistic that the Fed will cut rates as early as March 2024 – so it will take some positive data and/or clear hawkish signals to change this narrative. However, the reality is that the US economy remains resilient and GDP growth is above trend while most of the world is falling into recession or experiencing a slowdown in economic activity. It remains highly unlikely that the Fed will cut rates anytime soon as the risk of inflation is rising again given the strength of the US economy.
Given the Fed-friendly data, we are likely to see a positive meeting today. Oil prices continue their slide into the fifth session as a glut of US exports and doubts over whether OPEC+ will be able to deliver on their planned production cuts as they would also lead to an overall decline in market share. The weakness in oil prices is not only due to concerns about oversupply, but also because oil traders continue to expect lower demand amid a slowdown in economic activity and weaker consumer demand.
Bitcoin hovered near $44,000 after posting its longest winning streak since May. This rally was driven in part by expectations of looser monetary policy and an upcoming ETF approval. I expect further gains and continue to advise staying LONG in Bitcoin for the medium to long term. The price of gold also rose slightly following the recent slide in yields.
👁 ROB'S MARKET OVERVIEW:
December 06, 2023
🌐/🇺🇸 Global/US Markets ↗️/➡️ (positive start into session with some additional gains – sideways in second half of the day)
Cyclical Stocks ↗️/➡️
Tech/Growth Stocks ↗️/➡️
Financial Stocks ↗️/➡️
Defensive Stocks ➡️
Energy Stocks ➡️ (energy stocks already at very low levels)
Materials Stocks ↗️ (rebound after recent selling)
💱 Forex
AUD ↗️/➡️/↘️
CHF, JPY ➡️/↗️
GBP ➡️
USD, CAD ↘️/➡️ (overall remains in demand)
EUR ↘️
⚒ Commodity Markets ↕️
Oil prices ↕️/↘️
Natural Gas prices ↕️
Metal prices ↗️
Gold ➡️/↗️ (remains volatile, benefits from falling yields and short-term oversold conditions)
⚡️Cryptos ↗️ (Bitcoin remains bullish)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
Your Robert