Morning Minutes

Earnings and Central Banks Boost Stocks; Nonfarm Payrolls Preview




Stock markets around the world are up this morning, building on yesterday afternoon’s late US market rally. Investors have reacted positively to central bank news and commentary over the last 24 hours. NASDAQ futures are up 1.4%, adding to yesterday 2.0% index gain, while S&P 500 futures are up 0.5% adding to its 1.0% gain from yesterday. Over in Europe, the Dax is up 1.2% while the FTSE is up 0.6%. The US Dollar continues to retreat enabling Gold to climb 1.3% to within striking distance of the $2,000/oz round number, and Copper to rise 1.0%.

Investors appear to be responding positively to two items from recent central bank decisions and commentary. First, although rates continue to rise, central bankers have not been any more hawkish than before and hints toward neutrality have started to peek through. Second, with inflation starting to come down, expectations that central bankers may be able to manage a soft landing for the world economy continue to increase. Although the Fed raised interest rates yesterday, it slowed the pace to a 0.25% hike and took a less hawkish tone at the press conference. This morning, the Bank of England, who is still playing catch-up, announced a 0.50% rate hike as expected but two MPC members voted for no hike, and the Bank indicated that it expects a shallower recession than previously thought. The European Central Bank, who also is still in catch-up mode, also announced a 0.50% rate hike as was widely expected.    

Meta Platforms is up 19.2% in premarket action after beating the street on sales ($32.1B vs street $31.5B) and issuing encouraging guidance. Merck ($1.62 vs street $1.53) beat the street as well. After the close today, results are due from Apple,, Alphabet, Ford, Starbucks, and others.

Tomorrow brings US nonfarm payrolls with investors expecting growth to slow to 185K in January from 223K in December.  Earlier this week, ADP payroll growth was weaker than expected, but initial jobless claims announced this morning have remained positive now running below 200K for four weeks in a row. Average hourly earnings may also attract attention with the wage inflation measure widely expected to rise to 4.9% from 4.6% last month.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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