Moderate US job growth slowdown expected

All US major indices finished slightly below the flatline on Thursday, as investors cautiously awaited the highly-anticipated payrolls report due today. The Dow closed marginally lower, while the S&P 500 and the Nasdaq 100 lost 0.1% each. Materials, consumer staples, and utilities were the worst-performing sectors while healthcare outperformed. In Europe, equity markets closed mostly higher after a volatile session but held close to March lows as investors continued to show unease with higher bond yields and growing concerns that higher interest rates will be the new norm for central banks moving forward.  

Summary for 06.10.2023 

• Asian equity markets mostly rose this morning, extending gains from the previous session as investors look ahead to a key monthly jobs report which is expected to show that the US economy added fewer jobs in September compared to August. Still, benchmark indices in the region are on track to finish the week with sharp losses as global bond yields surged to multi-year highs earlier in the week, putting downward pressure on equities. Shares in Australia, South Korea and Hong Kong advanced, while Japanese equities were sluggish.  
• European shares are on track for advances and US futures held steady overnight as traders’ attention turns to the upcoming US payrolls report. 
• WTI and Brent futures steadied above $82 and $84 per barrel, respectively, on Friday but were still set to lose more than 8% this week, as a weakening global demand outlook outweighed concerns about tight supply. EIA data indicated that US gasoline demand fell sharply in recent weeks, while analysts suggested that demand destruction has possibly begun along with a slowdown in seasonal travel. 
• The number of Americans filing for unemployment benefits edged higher by 2,000 to 207,000 last week, below estimates of 210,00 and remaining close to the seven-month low of 202,000 from earlier in the month. The four-week moving average for initial claims is about 209,000, down from 235,000 in mid-August and the lowest since February. Economics Today expects nonfarm payrolls to have increased by 170,000 in September, compared with 187,000 in the previous month. 
• Federal Reserve Bank of San Francisco President Mary Daly said Thursday that policymakers can hold interest rates steady if the labour market and inflation continue to cool or financial conditions remain tight. 
• The US and China are moving closer to setting up a meeting between Presidents Joe Biden and Xi Jinping at next month’s APEC summit, though officials in Beijing haven’t yet signed off.  
• Exxon Mobil is in advanced talks to acquire Pioneer Natural Resources in a deal that could value the Permian shale basin producer in the region of $60 billion. The acquisition would expand Exxon’s footprint in one of the most lucrative areas of the US oil patch. Pioneer is the third-largest producer of oil in the Permian basin after Chevron Corp and ConocoPhillips. 
• PepsiCo shares were down by 5.2% yesterday after a Barclays analyst maintained an “Overweight” rating on the equity but adjusted the price target from $198 to $179. Meanwhile, shares of Coca-Cola Co also fell by around 4.9%. 
• Rivian Automotive tumbled 23% on Thursday after the electric vehicle maker announced a $1.5 billion convertible bond sale and released a weaker-than-expected revenue forecast for the third quarter. 
• French pharmaceutical giant Sanofi is exploring a potential acquisition of cancer drugmaker Mirati Therapeutics. Mirati’s shares surged 45% – the most since 2017 – in New York trading.