Market Report: Markets are weak as job numbers do little to raise Xmas spirits
Derren Nathan, head of equity research, Hargreaves Lansdown: “The FTSE’s in the red this morning. While the Bank of England is widely expected to bring rates down to 3.75% on Thursday, today’s employment figures raise the question of whether that will be enough to stimulate growth as the UK economy limps towards the new year.
If setters stick to the playbook, rates will be at their lowest level since February 2023, but save for the exceptional circumstances of the coronavirus pandemic, unemployment of 5.1% is now at its highest level since 2016. With wage growth easing only slowly, the headroom for further rate cuts next year looks pretty tight.
Later on, it’s the turn of official US jobs numbers, which haven’t been seen since before the US government shut down. Non-farm payroll numbers are expected for both October and November, with last month likely to be a cleaner-looking print. Consensus forecasts suggest around 50,000 new hires were made, less than half the 119,000 seen in September, but the range of expectations is much wider than usual.
If recent private jobs data is anything to go by, the risk here is to the downside. With average hourly earnings expected to be up 3.7% on a 1-year view the juggling act for those with the keys to monetary policy also looks increasingly tricky stateside. That’s weighing on sentiment with US stock futures pointing downwards today. If, however, jobs and wage growth comes in weaker than expected, there is a chance that the bears will go back into hibernation on hopes of a more doveish approach by the Fed in 2026.
Brent crude oil prices are precariously close to falling through the $60 barrier. A peace deal between Russia and the Ukraine looks to be back on the agenda but there have already been multiple false dawns this year. Even without Russian exports, concerns around Chinese demand as well as increasing production from OPEC+ members and other nations are keeping prices way below the $80 peaks seen earlier this year.”