Nonfarm Payrolls Spark a Selloff

US index futures have started to sell off hard following the release of North American employment and wage inflation numbers. Prior to the report, trading had been pretty quiet. Currently, US index futures are down 0.3%-0.4%.   

North American job growth was very strong last month, as US nonfarm payrolls (272K vs street 185K) and Canada employment change (26.7K vs street 22.5K) both beat expectations. US average hourly earnings (4.1% vs street 3.9%), and Canadian average hourly wages (5.2% vs previous 4.8%) both showed wage inflation increasing. The US 10-year treasury note yield is climbing on the news, trading near 4.40% indicating increased pressure on the Fed to hold interest rates when it meets next week and weakens the case for further rate cuts in Canada.

Over in Europe today. It seems to be a case of “be careful what you wish for, you might get it”. A day after the European Central Bank cut interest rates for the first time in years, indices are selling off with the DAX and CAC both falling more than 0.7%, and the FTSE falling 0.5%.  

Earlier this morning, China reported a bigger than expected trade surplus ($82.6B vs street $73.0B), built on better than expected export growth (7.6% vs street 6.0%). Smaller than expected import growth (1.8% vs street 4.2%) appears to be impacting demand expectations for some commodities as Copper is down 2.7% on the news. Precious metals are also under pressure with Gold down 2.4% and Silver down 4.1%. US Crude Oil is up 0.4% and trading back above $75.00/bbl after some OPEC+ members started to walk back the prospect of voluntary cuts winding down.  

Today may also see a big showdown between trading and reality in meme stocks. Gamestop soared 47.5% yesterday ahead of a livestream on the stock scheduled for noon EDT today by meme trader “Roaring Kitty” who apparently has amassed a sizeable stock and options position on GME. This morning, however, the shares are down 23.8% in premarket action after the company reported quarterly sales that were worse than expected, and down 29% from the same quarter a year ago.

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