European Outlook: Asian stock markets traded mixed, as investors digest U.S. tax cut plans, Powell’s nomination as Fed chair ahead of today’s U.S. jobs report. Japan was closed for a holiday, Hang Seng and ASX moved higher, but the CSI 300 was under pressure and the Shanghai Composite Index is heading for a weekly decline of over 1% led by technology shsares and brokerages following the Communist Party Congress. UK100 futures as well as U.S. futures are moving higher though. U.K. markets remain underpinned by yesterday’s BoE report, which lifted rates, but didn’t put further moves on the agenda. This saw U.K. yields heading south yesterday and the UK100 bagging a 0.90% gain. Today’s local calendar is pretty empty, leaving markets to digest other news and look ahead to U.S. data in the afternoon.
BoE Delivers First Rate Hike in 10 Years: The BoE did the expected and hiked rates by 25 bp to 0.50%, thus effectively reversing the “emergency” post-Brexit vote cut from last year. There were 2 dissenters and after yesterday’s move the central bank no longer warns that markets may be underestimating future rate hikes.
President Trump officially nominated Jerome Powell as Fed chairman, replacing Janet Yellen. Powell is seen as a moderate and he has had experience in the government, the private sector, and at the Fed. He’s unlikely to make any abrupt changes to Yellen’s gradualist normalization path and should be a solid facilitator between the hawks and doves.
Main Macro Events Today
- US NFP – Expectations – expected to surge at 312k in October, as the labor market gets back in gear following the hurricane disruptions that knocked employment down by 33k in September.
- US Unemployment Rate – Expectations – unchanged at 4.2% for October.
- Canadian Employment & Trade – Expectations – a 15.0k gain in October hiring after the 10.0k gain in September. The Employment has posted gains since December of last year. The trade deficit, is seen narrowing to -C$3.0 bln in September from -C$3.4 bln in August.
- US PMIs – Expectations – The ISM nonmanufacturing indexshould dip to 58.5 in October.
Charts of the Day
Support and Resistance Levels
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