Friday, December 03, 2021
Omikron creates uncertainty
Wall Street weak according to labor market report
At the end of the week, investors on Wall Street are rather reluctant. The increase in jobs in November was significantly lower than expected. In addition, there is the uncertainty about the possible consequences of the new Corona variant Omikron for the global economy.
After a volatile week, Wall Street stopped trading at discounts. The focus was on the US labor market report for November, which with 210,000 new jobs remained well below the forecast of 573,000. This is astonishing, as companies are currently increasingly trying to hire new employees, it said. That could indicate problems the labor market is facing in the pandemic recovery, especially if the omicron variant becomes more widespread. However, the unemployment rate fell more than expected and the employment rate rose.
While the job creation was “not great,” the Fed will likely view the increase in employment as a “gain” in view of its goal of maximum employment, said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management.
The data had been eagerly awaited as Fed President Jerome Powell had recently spoken of a strong economy and the prospect of accelerating tapering. This could cause the Fed to turn the rate screw earlier than expected.
Of the Dow Jones Index decreased by 0.2 percent to 34,580 points. Of the S&P 500 closed 0.8 percent in the red and the Nasdaq Composite lost 1.9 percent. There were 909 (Thursday: 2,520) course winners and 2,454 (870) losers. 119 (122) titles closed unchanged.
The other published US economic data did not provide a clear picture. The ISM index for the service sector improved in November, while analysts had expected a decline here. The Markit purchasing managers’ index showed the opposite. Business activity in the US service industry was weaker in November than in the previous month. US industrial orders rose faster than expected in October.
Uncertainties about the Omikron variant remain
The market continued to be shaped by the uncertainties about the possible effects of the new Corona virus variant Omikron on global economic development. It is still uncertain how quickly it will spread, what negative effects on the economy will result and whether the existing vaccines are sufficiently effective.
The came on the foreign exchange market dollar briefly under pressure according to the labor market report, but quickly caught up again. The number of job creation has disappointed, but the rapid recovery shows that the foreign exchange market is looking more at the decline in the unemployment rate and the increase in employment, said Ima Sammani, foreign exchange analyst at Monex Europe. This could lead the Fed to reduce tapering faster than planned in view of the ongoing inflationary pressures and then to raise interest rates.
Yields on the bond market fell to multi-month lows. A tighter monetary policy and the Omikron variant could put a strain on economic growth, it said. This triggered “safe haven” bond purchases.
Of the Gold price gained after the weak labor market report. However, participants also spoke of a recovery after the lowest level in more than seven weeks had been marked the day before.
At the Oil market the prices gave up intermittent gains after they had recently fallen significantly in view of worries about the global economy due to the new virus variant. The day before, Opec + surprised the market by sticking to its expansion of production by 400,000 barrels per day. However, the cartel has kept the option open to adjust the delivery rate at short notice.
Didi slide down with a withdrawal from the stock market
The ADR of the Chinese transport operator listed in the USA Didi decreased by 22.2 percent. The company announced its immediate withdrawal from the New York Stock Exchange just five months after going public. Instead, a listing in Hong Kong is being prepared. The withdrawal came shortly after stricter US rules were adopted for foreign companies listed on the stock exchange there. Beijing is also said to have increased the pressure.
Elon Musk has stood out from further Tesla-Share separately. According to a mandatory announcement, the founder of the electric car manufacturer has sold more than 934,000 shares worth a little more than 1 billion dollars. The share lost 6.4 percent.
Docusign collapsed by 42.2 percent. The e-signature software company revealed signs of declining demand. In addition, the outlook for the current quarter fell short of expectations. According to retailers, the special economic activity caused by the corona is coming to an end. This also dragged down other values.
Marvell Technology gained 17.7 percent. The semiconductor company shone with a sales outlook for the current period clearly above the market forecasts. The results for the third quarter were also more positive than expected.