Major Indices, Gold and Oil hesitate ahead of key payroll data

Stocks are mixed to higher at midday, albeit with a cautious tone. Traders are anticipating tomorrow's big jobs report, but know that they won't be able to trade it before the start of the week. Strong jobs growth could spook markets on inflation fears; weak jobs growth could provide recession fears. Either way, next week could se a move to the downside and a return to risk-off dynamics.

For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/. 

Mixed messages from jobs data

Jobs continue to be the focus on Wall Street as we head into a three-day holiday Easter weekend, with mixed employment data reported this week. Traders must wait until Sunday to respond to the key Non-Farm Payroll data, released as markets are closed on Good Friday. Analysts expect that report to show the economy created 240,000 jobs in March, an unemployment rate remaining unchanged at 3.6%, and average hourly earnings slowing to 4.3% year-on-year. This data presents little or no incentive for the Fed to pause its rate hike plans.

Jobless claims rose, layoffs rising

• First-time jobless claims rose notably to 228,00 in the week ending April 1, well above and expected 201,000. The four-week moving average rose to 237,750 claims
• The Department of Labor noted changed the methodology used to seasonally adjust the data, so we’ll need to adjust to the new adjustment factors to get a feel for current actual trends
• Seasonally adjusted continuing claims for the week ending March 25 rose 6,000 to 1.823 million
• Meanwhile, Challenger’s Job-Cut Report showed corporate intentions to layoff 89,703 workers in March, up from 77,770 in February, giving some insight into the corporate sector’s increasingly negative outlook

Markets flat

• At the time of writing, the broad S&P 500 index and the tech heavy NASDAQ were up marginally by 0.2% and 0.5% at 4,097 and 12,055, respectively
• The VIX, Wall Street’s fear index, dipped to 18.9 reflecting a moderate view of risk
• The dollar index was flat at 101.5, with £/$ 1.25 and €‎/S 1.09
• Yields on 2- and 10-year Treasuries were unchanged at 3.79% and 3.29%

Commodity prices flat after recent upticks in Gold, Oil

• Gold’s was 0.3% lower to$2,030 per ounce. Gold has reasserted its role as an inflation and risk hedge
• Crude oil prices were unchanged at $80.4 per barrel. Crude oil prices halted the sharp rally that started on Monday, but they’ve thus far held inside of Monday’s trading range
• The OPEC+ surprise announcement on Monday that it would cut output spurred fears of a return to inflation amid a resilient economy and supported money flow into the commodity sector to protect portfolios against the erosion of inflation
• Grain and oilseed markets were mixed to lower, continuing to face recessionary headwinds.
• Wheat is exception this morning, with Mid-West weather concerns are once again grabbing the headlines
• Soybean prices fell sharply today, pulling corn prices down with them on weak technical indicators and worrying fundamentals

Taiwan could be a flashpoint, again

• China and the US increased military activity in the waters around Taiwan amid high tensions following yesterday’s meeting between US Speaker of the House Kevin McCarthy and Taiwan President Tsai Ing-wen in California
• China may be waiting until French President Macron, currently in China with more than 50 corporate CEOs to discuss trade issues, could restrain China’s response
• China’s Foreign Ministry accused the United States of supporting Taiwan separatists, stating that the Taiwan issue is the first red line in China-US relations that must not be crossed
• China’s Defense Ministry stated that the People’s Liberation Army always maintains a high vigilance and resolutely defends national sovereignty and territorial integrity

Analysis by Arlan Suderman, Chief Commodities Economist.

Read more of Arlan’s thoughts at StoneX Market Intelligence at https://my.stonex.com/