Weekly Market Wrap 30-November to 04-December/2020

Marius Paun | London, UK | Senior dealer | Friday 04th December 2020

The US Non-Farm Payrolls Disappoint

The US non-farm payrolls data showed employers added 245,000 jobs missing expectations of 460,000 jobs with the previous reading revised lower to 610,000 from 638,000. At the same time, the unemployment rate dropped to 6.7%. The initial reaction in the markets was pretty muted with the US dollar declining before rallying back.

Federal Reserve Chair Jerome Powell testified in front of the Congress saying the outlook for the US economy remains uncertain, the pace of improvement in the labour market has moderated and the rebound in household spending was helped by federal aid. He added vaccine news is encouraging, but the rise in covid cases is still concerning. The US media reported that according to Operation Warp Speed documents the first shipments of Pfizer vaccine will start to be delivered on December 15.

China released its November PMI figures with Manufacturing coming in at 52.1 vs expected 51.5 and Non-manufacturing at 56.4 vs expected 56. Interestingly enough Deutsche Bank predicts China’s GDP will grow by 9.5% next year.

Not so good news for Beijing is the US passing a bill that could potentially delist Chinese firms quoted on US stock exchanges. They have to allow US inspectors for financial auditing although Chinese companies have 3 years to comply with the new rules and the majority of them are already audited.

The European Central Bank will have its monetary policy meeting next week and it appears that it would like to extend PEPP by a full year to help smooth the coronavirus effect. Meanwhile, inflation in the euro area continues to be subdued with the readings unchanged from last month. The preliminary CPI came in at -0.3% vs estimated -0.2% year on year.

Back in the UK, Pfizer coronavirus vaccine gained approval for use in the country, the first in Western Europe, on Wednesday. The UK Health Secretary Matt Hancock confirmed the first batch of 800,000 doses will arrive next week. Elsewhere, on Friday we learnt that a Brexit deal is ‘imminent’ according to a Reuters report and is now ‘expected by the end of the weekend bar any last-minute breakdown’…. Anyone feeling like the boy who cried wolf here?

The OPEC+ meeting this week started with high expectations that members will roll the output cuts for at least 3 months and gradually increase it from January. However, there was a setback as members failed to agree initially and rescheduled to meet on December 3rd as more talks were needed. Finally, they agreed to raise production by 500,000 barrels per day starting in January. The US crude continued its good run, trading around $46 going into the weekend.

Gold prices dropped to a low of $1764 initially but a weak US dollar spurred a rebound, trading at $1835 on Friday afternoon. Bitcoin made headlines again. After a violent selloff the other week which took its price from above $19,000 to $16,200 the cryptocurrency leader moved to a new all-time high of $19,891 on Coinbase exchange (the old record was $19,511)… interesting times.