Jobs data outperforms, although rate hike implications dampen market sentiment

Better-than-expected jobs data raised the likeliness of a bumper rate hike this month, but with markets having finally stabilised it seems the focus will instead shift to corporate earnings.

US employment data proves resilient for now

“The latest US jobs report helped alleviate fears that the widely anticipated recession could begin to hit business investment and hiring decisions. Nevertheless, we have seen some weakness for US markets as better-than-expected payrolls, and stable unemployment/wages strengthen the case for a 75 basis-point hike in three-weeks’ time. Inflation remains the key concern for the Fed, and the absence of major red flags in the economy serves to raise the likeliness of Fed action to stifle price pressures. As ever, it is the tech-focused Nasdaq that suffers to the greatest degree, with bloated valuations coming into question in the face of surging rates and a potential recession.”

Focus to shift to earnings, as rising commodities impact demand and margins

“Economic concerns are expected to take a back seat in the coming weeks, with US banks kicking off earnings season on Thursday. Inflation remains the key concern for businesses and customers alike, as we keep a keen eye out for whether rising costs are passed on to the bill or the bottom line. With commodities such as Lumber and Natural Gas outperforming over the course of the week, companies must continue to decide whether to price out demand or slash their margins.”