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US jobs growth revised downward

Data released on Wednesday showed that the US labour market has been much weaker than initially reported. Traders interpreted the data as a green light for the Federal Reserve (Fed) to begin cutting rates in September. Dovish minutes from the Fed’s last monetary policy meeting were also supporting sentiment on Thursday. Gold remained stable near USD 2500 per ounce and the Dollar Index continued to slide ahead of the meeting of central bankers in Jackson Hole, USA.

Date
Auteur
Shane Strowmatt, LGT
Temps de lecture
5 minutes

Jobs sign
© Schutterstock

The Bureau of Labor Statistics' preliminary benchmark review showed that March 2024 employment was 818,000 jobs lower than initially reported, marking the largest downward revision since 2009. This adjustment indicates an average monthly job gain of 173,500 from April 2023 to March 2024, compared to the previously estimated 242,000. The revision predominantly affected the private sector, with significant decreases in professional and business services.

In New York, stock indices made mild gains midweek on the prospects of the Fed soon beginning its interest rate cutting cycle. The Dow Jones Industrial closed 0.1% higher, the S&P 500 gained 0.4% and tech stocks led gains with the Nasdaq-100 finishing the session 0.5% higher.

Fed meeting minutes suggest imminent rate cut

Federal Reserve officials in July indicated a high probability of an interest rate reduction in September, according to the minutes of the Federal Open Market Committee, which is responsible for setting US monetary policy. The meeting minutes revealed that while all members voted to maintain current rates, a significant number were inclined towards easing policy sooner. Markets are now fully anticipating a September rate cut.

Target’s return to sales growth suggests resilient consumer

Target reported a 2% increase in comparable sales in the second quarter largely backed by discretionary spending on items such as clothing. The growth follows a period of sluggish sales and the return to sales growth comes as another sign that the US consumer remains strong. Target shares shot up by more than 11% on Wednesday. Last week, the world’s largest retailer, Walmart, reported increased demand for high-quality meat products and name-brand drugs, a sign that consumers aren’t moving to lower-quality or generic products to save cash.

Asian trading mixed as markets interpret business activity data

In the Asia-Pacific region, stock markets were trading mostly higher on Thursday, swinging back and forth between gains and losses as Purchasing Managers’ Indices (PMI) were being released across the region. In Tokyo, the Nikkei 225 was trading 0.4% higher after Composite PMI came in at 53.0 for August, up from July’s 52.5 reading. Notably, manufacturing activity was growing again. In South Korea, the Kospi was trading with small gains and losses throughout the session. In Australia, the S&P/ASX 200 was up 0.3% after its Composite PMI swung back into growth territory at 51.4, up from 49.9 in July. A level of 50 separates growth from contraction. Hong Kong's Hang Seng Index and China’s mainland CSI 300 were both down about 0.1%.

Corporate and macroeconomic calendars

Corporate news in focus: Quarterly figures from Swiss Re, Intuit. Annual general meeting at Alibaba.

Economic data in focus: Purchasing Managers’ Indices from several countries throughout the day, including France, Germany, the euro area, UK and US; US weekly initial jobless claims, US existing home sales.

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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