Today’s markets: Investors go defensive as US jobs disappoint

Stocks in Europe rose in early trading on Thursday ahead of the Good Friday holiday and are on track to just about rise for the week.

The FTSE 100 was just below 7,700, up around 0.5 per cent, while the DAX traded a little above 15,500, some 0.2 per cent higher. US markets were mixed yesterday with the Dow up a quarter of a percent and the S&P 500 off by a similar margin. The Nasdaq declined 1 per cent even though tech stocks should have benefitted from lower Treasury yields. The 10-year slipped under 3.3 per cent and the 2-year was around 3.75 per cent, having traded near 4.2 per cent earlier in the week. Investors seem to prefer defensive companies housed within the S&P rather than the tech-heavy Nasdaq.

Yields fell to their lowest level in seven months following weaker-than-expected data in the US: jobs data – light of my life, fire of my loins. The weak employment figures added to the sense that Fed rate hikes are starting to take effect. ADP jobs figures were far weaker than expected, on top of the JOLTS fall earlier in the week. More weakness: ISM Services at 51.2 was weakest since December; prices paid weakest since May 2020.

The market is now pricing a whole percentage point cut by the Fed by January – but again I think the market is way too keen to price in a change of course. This is not what the Fed is saying nor what it will do unless there is a major credit crunch. But it’s lose-lose right now – either the Fed hikes into oblivion or the economy is trashed or both. Non-farm payrolls come out tomorrow expected at +238k, unemployment at 3.6 per cent and average earnings 0.3 per cent higher.

Meanwhile, reports of the death of the dollar are greatly exaggerated. All sorts of chatter is flying around about non-USD crude trades being settled meaning the end of the petrodollar…all utter rubbish. Be more afraid of a central bank digital currency taking away your freedom, for that is the goal of all governments unless the people decide. The problem today is people prefer safety over freedom.

Neil Wilson is chief market analyst at Finalto

The Trader will return on Tuesday 11 April. Happy Easter!