US labour data resilient, as consumers spend their savings to fight inflation

 

Stocks cut much of their earlier losses Friday as investors looked past hotter-than-expected labour data to the upcoming Federal Reserve meeting.

Stocks dipped after labour data released Friday morning showed payrolls rose by 263,000 in November, a bigger gain than the 200,000 increase expected by economists polled by Dow Jones. The unemployment rate held steady at 3.7 per cent.

It was the final monthly employment report before the Fed’s two-day meeting December 13-14, in which the central bank is expected to slow to a 50 basis point interest rate hike from the 75 basis point hikes seen recently.

The Dow Jones Industrial Average closed up 0.1 per cent after hitting a session low of more than 350 points. The S&P 500 dipped 0.1 per cent, rebounding from an earlier loss of 1.2 per cent. The Nasdaq Composite also made up ground to end nearly 0.2 per cent lower. The tech-heavy index dropped as much as 1.6 per cent earlier in the day.

All three major averages ended up for the week, giving them their first two-week winning streak since October. US-traded stocks in Chinese companies scored their best week since March, as hopes were renewed that the nation might ease up on Covid restrictions.

And it appears consumers are spending their savings to stay ahead of inflation. Data released by the Bureau of Economic Analysis released last week shows that the U.S. personal saving rate dropped in October to 2.3 percent. How low is that? Since 1959 there has been only one month when the saving rate was that low or lower.

One reason that consumers have been able to get away with spending rather than saving is that they built up a cushion of savings during the pandemic. They spent less while stuck at home, and they got $1.5 trillion in stimulus cheques and other aid. Right now though it appears that US consumers are struggling to maintain a standard of living they can no longer afford.

In commodity news, OPEC and non-OPEC oil producers could impose deeper oil output cuts, energy analysts said, as the influential energy alliance weighs the impact of a pending ban on Russia’s crude exports and a possible price cap on Russian oil.

It was mixed across the sectors, with materials overperforming.

Futures

The SPI futures are pointing to a 0.3 per cent gain.

Currency

One Australian dollar at 7:20 AM has weakened compared to the US dollar on Friday buying 67.77 US cents (Fri: 68.11 US cents).

Commodities

Iron ore futures are pointing to a 2.9 per cent gain. Iron ore is 4.1 per cent higher at US$107.30 tonne.
Gold fell 0.3 per cent. Silver gained 1.8 per cent. Copper rose 0.9 per cent and oil fell 1.5 per cent.

Figures around the globe

Across the Atlantic, European markets closed mixed. Paris lost 0.2 per cent, Frankfurt added 0.3 per cent and London’s FTSE closed flat.

In Asian markets, Tokyo’s Nikkei fell 1.6 per cent, Hong Kong’s Hang Seng lost 0.3 per cent and China’s Shanghai Composite closed 0.3 per cent lower.

On Friday, the Australian sharemarket fell 0.7 per cent to close at 7301

Ex-dividends

Collins Foods (ASX:CKF) is paying 12 cents fully franked
Incitec Pivot (ASX:IPL) is paying 17 cents fully franked
Qualitas Real Estate Income Fund (ASX:QRI) is paying 0.9666 cents unfranked

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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