General Market Analysis – 29/10/24

US Markets Push Higher Ahead of Earnings – Dow up 0.65%

US stock markets rose yesterday ahead of significant earnings and data updates due in the coming days. Leading the charge, the Dow closed up 0.65%, followed by the Nasdaq and S&P, which gained 0.29% and 0.28% respectively. Treasury yields also edged higher as traders looked ahead to key jobs data expected in the next few days, with the 2-year yield adding 1 basis point to reach 4.108%, and the 10-year yield rising 1.2 basis points to 4.244%. The dollar strengthened slightly, with the DXY index gaining 0.06% to move to 104.29.

However, the most significant moves were seen in oil markets, where prices crashed following reports that Israel had only targeted Iranian military assets over the weekend. Brent crude fell 6.09% to $71.42, while WTI crude dropped 6.13% to $67.38. Gold initially declined on haven selling but later stabilised, losing just 0.2% from Friday’s close to finish at $2,743.31.

Jobs Data Crucial for the Dollar This Week

With four key employment updates due in the US this week, all with potential to significantly influence the dollar, markets are bracing for volatility. The Non-Farm Payrolls report on Friday is expected to have the largest impact on sentiment. However, after last month’s employment data prompted a rise of over 4% in the dollar, traders will be looking to position themselves early should any of the upcoming jobs figures deviate markedly from expectations. This week’s updates include JOLTS Job Openings, the ADP Non-Farm Payrolls, weekly unemployment claims, and Non-Farm Payrolls, all of which last month pointed to a resilient job market. Further dollar appreciation could follow similar results, while any negative surprises could trigger sharp corrections.

Macroeconomic Calendar Kicks into Action Today

The next few days will bring a substantial wave of macroeconomic releases, especially from the US. The event calendar starts tonight and remains busy until late on Friday. While the first two sessions may be relatively quiet, volatility is expected to increase once New York opens, with top-tier data releases due simultaneously. In the current environment, with the Fed’s heightened focus on employment data, the JOLTS Job Openings (expected at 7.98 million) is likely to have a greater market impact than the CB Consumer Sentiment index (expected at 99.5). Later in the day, central bank updates are expected, with speeches from the Swiss National Bank’s Martin Schlegel and the Bank of Canada’s Tiff Macklem. Both central banks have recently cut rates, so any fresh commentary is anticipated to generate further volatility in their respective currencies.

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