(Bloomberg) – Active trading in shares came amid the report Republicans may agree to a short-term extension of the US debt limit, continuing the volatility trend that has captured the markets during the week.
The S&P 500 cut losses after falling more than 1%, while the Nasdaq 100 rose after falling earlier. The S&P 500 has posted 1% gains four days in a row amid a growing list of concerns, including debt ceiling debates, inflation and rising energy prices. European equities also cut losses in half as natural gas prices, which at one point rose 40%, fell after Russian President Vladimir Putin said the country was ready to help.
The turbulence stemmed from the fact that the ADP employment report ahead of Friday’s nonfarm payrolls data boosted confidence in the US economy. It also reinforced expectations that the Federal Reserve will begin cutting bond purchases next month, leading to a drop in the yield on 10-year US Treasuries. Meanwhile, lawmakers continue to argue over spending limits in Washington two weeks before the Treasury Department says the federal government will fail to meet all of its commitments.
“There is no doubt that private sector wage growth is positive, but there is no shortage of catalysts to drive the market: rising energy prices, a debt ceiling stalemate,” said Mike Loewengart, Managing Director of Investment Strategy at E * Trade … Financial. “And the positive labor market data suggests that the Fed could tighten policy at a faster pace. But do not discount the fact that the number of employees has increased. This is definitely a good thing in terms of recovery. “
A strong employment report could allay concerns about current hiring problems during the recovery in the US economy. Markets remain volatile, however, amid concerns that elevated inflation could persist longer than the central bank expects, especially in the face of an energy crisis this winter.
“With the global energy problem looming in the winter months, inflation is likely to pick up, especially since natural gas is a key ingredient in plastic production,” wrote Peter Cecchini of Axonic Capital. “After years of rapid development, natural gas prices have reached their highest level since 2008. The big question is, how will the Fed react? “
If the job growth data in the ADP data is indeed reflected in Friday’s Labor Department report, analysts expect the Fed to announce plans to cut its asset buying program in early November. Fed Chairman Jerome Powell said he was looking for “decent” job growth.
“Labor shortages in the United States have resulted in reduced working hours for businesses such as restaurants, while some assembly lines have also closed due to a lack of parts,” said Peter Boquvar, chief investment officer, Bleakley Advisory Group.
“We are in a completely different job market as there is a shortage of workers in many sectors,” Boquvar said. “Hopefully we are in the midst of seeing a surge in labor supply as children go back to school, Covid is under control and additional unemployment benefits stop.”
Oil in New York fell, the dollar strengthened against major peers, and bitcoin jumped above $ 54,000.
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Here are some of the events to watch this week:
- Reserve Bank of India Monetary Policy Decision on Friday
- On Friday, the US Department of Labor will publish data on unemployment and job creation.
Some of the main movements in the markets:
- As of 13:48 New York time, the S&P 500 is largely unchanged.
- Nasdaq 100 up 0.3%
- Dow Jones Industrial Average Down 0.2%
- MSCI World Index Down 0.4%
- Bloomberg US dollar index rose 0.3%
- The euro fell 0.4% to $ 1.1547.
- The British pound fell 0.4% to $ 1.3571.
- The Japanese yen remained virtually unchanged at $ 111.43 per dollar.
- The yield on 10-year Treasuries changed insignificantly and amounted to 1.52%.
- The yield on Germany’s 10-year bonds remained virtually unchanged at -0.18%.
- The yield on 10-year British bonds fell one basis point to 1.07%.
- West Texas Intermediate crude falls 1.6% to $ 77.70 a barrel
- Gold futures have changed little
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