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Morning Research Notes - 03.09.24
On Monday, US financial markets were closed in observance of Labor Day. Trading will resume on Tuesday, operating under normal hours for the rest of the week. Commodities experienced a bearish day on Monday: spot gold decreased by 0.2% to $2499.51 per ounce. Meanwhile, Brent crude oil saw an increase of 0.8%, reaching $77.52 per barrel. In contrast, iron ore experienced a significant drop of 4%, falling to $96.95 per tonne.
Investors are closely watching the upcoming labour market data after the previous month’s report fell short of expectations. The Bureau of Labor Statistics noted that Hurricane Beryl, which hit Texas during the survey week, had no discernible effect on the employment data. However, the household survey indicated that 436,000 individuals were unable to work due to adverse weather, and 249,000 were on temporary layoff. This increase in unemployment is largely attributed to these temporary layoffs. The Federal Reserve will use the forthcoming report to decide on the magnitude of the interest rate cut at their next meeting, with options being either a 25 or 50 basis points reduction.
On Monday, the Australian markets experienced a bullish trend, with the ASX 200 closing 0.22% higher. This reflected a mixed performance across major indices. The Financials and Info Tech sectors posted gains of 1.14% and 0.38%, respectively. In contrast, the Materials, Health Care, and Utilities sectors declined by 1.11%, 0.25%, and 0.37%. Commodities had a bearish day, with aluminium, copper, zinc, and nickel prices falling by 2.96%, 1.96%, 2.94%, and 2.23%, respectively.
Chart of the day
US labour market’s weakness is emerging, with the Sahm Rule indicating a potential recession, with rising unemployment driven by increased labour supply rather than layoffs. The Fed is expected to adopt a more aggressive easing stance, contrasting with the RBA’s cautious approach. Some investors are considering hedging options for global equities, remaining cautious of market volatility leading up to the US election.
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Source: Livewire
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