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The Upcoming Nonfarm Payrolls Report
This week, investors’ attention will be on the nonfarm payrolls report for November, as they attempt to gauge the resilience of the U.S. economy amid rising interest rates. The report’s figures could determine the possibility of an early easing of the Federal Reserve’s strict monetary policies if job numbers increase substantially. Alternatively, a drop might trigger worries of economic cooling after a 525 basis-point rate hike, possibly leading to a cautious investment atmosphere. Experts predict the U.S. added 180,000 jobs in November, a slight increase from October's 150,000 jobs.
Alongside this, job opening statistics due on Tuesday are projected to show reduced numbers in November. Additionally, the initial jobless claims report on Thursday will be under scrutiny for any increased unemployment indications.
Potential Stock Market Rally?
U.S. stock markets have had a promising start to December, with the S&P 500 reaching its peak for the year on Friday. This surge fuelled confidence in the investment community that the Federal Reserve might be wrapping up its rate increase phase, as Fed Chair, Jerome Powell, hinted at a cautious approach towards future interest rate hikes. Further developments from Fed officials will have to wait until after their meeting on 12th and 13th December as they honor the pre-meeting blackout tradition.
Volatility in Oil Prices
Last Friday saw oil prices plunge over 2% due to doubts about the effectiveness of OPEC+'s supply cuts and worries about worldwide manufacturing activity slowing down. For the week, Brent recorded a 2.1% decrease, while U.S. crude dipped over 1.9%. OPEC+ proposed a 2.2 million barrels per day cut from the first quarter of next year, but there was skepticism about the voluntary nature of the cuts and the basis of measurement, leading to uncertainty about their actual implementation.
Decisions from Central Banks
The Reserve Bank of Australia will conduct its policy meeting on Tuesday, with predictions pointing toward an unchanged interest rate. However, with elevated costs and the new Governor Michele Bullock being viewed as a possible hawk, investors remain cautious. Similarly, the Bank of Canada is projected to maintain its consistent policy for the third consecutive meeting on Wednesday, given that recent figures indicate the country’s contraction in the third quarter.
European Data Snapshot
Investors will be carefully observing a speech by Eurozone President Christine Lagarde on Monday to gain insight into the bank's monetary policy ahead of its upcoming meeting on December 14. On the manufacturing front, Germany’s factory order data will indicate whether its manufacturing sector continues to struggle.
