Payroll Day, Covid Wave in Europe, Chinese Developer Debt
By Geoffrey Smith
Investing.com – It’s payday, and hiring is expected to have rebounded in October from an eight-month low in September. Average earnings and labor force participation will also be key variables when the headlines air at 8:30 a.m. ET. Europe is catching Covid again, and China has now implemented health measures in nearly half of its provinces as it defends its zero tolerance policy. Another big Chinese developer has also had problems with their debts – and not just debts held by distant foreigners. Stocks are expected to rise on the open, but Peloton and Uber (NYSE 🙂 will be under pressure after weak updates Thursday night. Here’s what you need to know about the financial markets on Friday, November 5th.
The official monthly U.S. labor market report is due at 8:30 a.m.ET (12:30 p.m. GMT), amid signs that employment prospects improved markedly in October as the economy put the summer wave of the Delta Covid-19 variant behind it.
Analysts expect the non-farm payroll to rise 450,000 through the middle of last month, from an eight-month low of 194,000 in September, where recent experience also suggests that a revision to the hike is quite possible. However, attention will also focus on the labor force participation rate, which has not recovered in line with overall employment, and income growth, which is expected to accelerate to 4.9. % year-on-year versus 4.6% in September. .
Weekly jobless claims figures suggest that labor market dynamics have remained intact since the payroll report deadline. Initial jobless claims posted a second consecutive post-pandemic low on Thursday.
2. Europe still catches Covid
The World Health Organization has warned of up to 500,000 deaths from Covid-19 this winter in the Europe region (which includes Russia), as rates of new infections and hospitalizations rise in a large part of the continent.
Seasonality, the decrease in immunity of the first wave of vaccines and, most importantly, a high and sustained level of resistance to vaccination seem to be the cause of the last wave, which is dominated by the Delta variant. New infections and deaths, relative to the population, are highest in Eastern Europe, where vaccination rates are lowest. In Russia, deaths amount to more than 1,100 a day and new infections are 40% higher than their previous peak last winter.
Germany and the Netherlands are also registering new infections at 11-month highs, raising fears of further closures in those countries. These developments come as the industrial sector in the eurozone is grappling with a sharp slowdown due to supply chain disruptions. German industrial production fell for a second consecutive month in September, while French production also fell and Spanish production growth slowed at a breakneck pace. Eurozone retail sales also fell surprisingly in September, by 0.3%.
3. Stocks should open to the upside; Uber and Peloton under pressure
US stocks are expected to open for the most part higher, on track to end the week at or near new highs, as confidence in the strength of the economy combines with assurances from the Chairman of the Federal Reserve , Jerome Powell, on the pace of interest rate hikes.
As of 6:20 a.m. ET, they were up nine points, or less than 0.1%, while they were up 0.2% and 0.4%
Stocks likely to be finalized later include Peloton Interactive (NASDAQ :), which fell nearly a third after office hours on Thursday after slashing its sales forecast. Uber will also be under pressure, though not as extreme, after reporting a net loss of $ 2.4 billion that eclipsed its first (heavily adjusted) profit at the basic operating level.
4. Chinese developers’ woes are spreading, as is the Covid epidemic
Kaisa Group (HK 🙂 has opened a new front in the battle to maintain the stability of the Chinese financial system. The real estate developer who, unlike dollar bonds held largely by foreign and professional entities, is largely owned by domestic retail investors.
Kaisa is the industry’s third-largest international debt issuer and has already had to restructure, having become the first Chinese issuer to do so five years ago.
Worryingly, the missed payments are occurring despite no signs of financial strain in the company’s accounts, which easily satisfied the authorities’ three âred lineâ indicators on leverage in its latest disclosures. Elsewhere, the Wall Street Journal reported that it sold two private jets to raise $ 50 million to cover interest payments it initially missed, and for China for the fifth time since August.
5. Oil stabilizes after post-OPEC slide
Crude oil prices have stabilized after slipping Thursday in response to guidance from the, which, as expected, raised the risks of a further oversupply next year.
With evidence of an increase in Covid-19 cases in Europe and a growing epidemic in China that is once again causing extreme public health measures in nearly half of its provinces, the market has been more inclined to heed these warnings.
As of 6:30 a.m., futures were up 1.1% to $ 79.66 per barrel, while they were up 0.6% to $ 81.02 per barrel. The Baker Hughes and data round out the week later.