Markets began the session nervously after another interruption to the U.S. jobs calendar and fresh evidence of stress in the labour market. Non-farm payrolls were delayed by a U.S. government shutdown - again - leaving investors without the usual Jobs Friday data and amplifying sensitivity to other labour signals.
A report from global outplacement firm Challenger, Gray & Christmas showed that layoffs announced by U.S. employers surged in January to the highest level for the month in 17 years. That jump in announced job cuts, combined with a selloff on Wall Street that has spread globally, has traders increasingly weighing the possibility the Federal Reserve will ease policy at its next scheduled meeting.
Market pricing remains mixed. While some measures imply a strong possibility the Fed will hold rates steady, funds futures have moved sharply. According to the CME Group's FedWatch tool, futures priced a 22.7% probability of a 25-basis-point cut at the U.S. central bank's next two-day meeting ending on March 18, up from a 9.4% chance a day earlier.
Equity markets slipped into a third straight day of losses, with particular strain in emerging markets. Korean shares led declines after the KOSPI plunged about 5% early in the session, triggering a trading halt. Other markets showed mixed moves: Japan's Nikkei 225 eked out a 0.6% gain as stocks rallied into Sunday's election, while pan-region European futures were mostly lower in early trade - pan-region futures last down about 0.1%, FTSE futures down 0.6% and German DAX futures up around 0.1%.
The risk-off environment did not leave all speculative positions untouched. Two of the year's most watched high-volatility trades found short-term support during the Asian session. Bitcoin, which fell below $70,000 on Thursday, reversed part of a 4.9% decline to trade 4.2% higher at $65,778.90 during the session. Silver, which suffered a 19% drop on Thursday, pared losses and traded up about 3.5% at $73.71 after a prior 10% intraday reversal.
Large-cap technology stocks continued to face pressure. Amazon shares plunged 15% in after-hours trading after the company projected on Thursday that capital expenditures would rise by more than 50% this year.
Market participants will also monitor a slate of scheduled events that could move prices later in the session. Corporate earnings set for release include Philip Morris International, Cboe Global Markets, Societe Generale and Telenor. Economic data due across Europe include Germany's industrial output and trade balance for December, the UK's Halifax house price reading for January and France's reserve assets and trade balance for January. The UK also plans debt auctions for 1-month, 3-month and 6-month government paper.
With headline jobs data unavailable this week and layoffs rising, investors are parsing firm results and regional data to gauge whether the labour market weakness will prompt the Fed to shift policy. For now, the combination of elevated announced job cuts, a multi-day equity selloff and volatile speculative trades has traders reassessing the path for U.S. monetary policy ahead of the March meeting.
Key developments that could influence markets today:
- Earnings: Philip Morris International, Cboe Global Markets, Societe Generale, Telenor.
- Economic data: Germany - industrial output and trade balance for December; UK - Halifax house prices for January; France - reserve assets and trade balance for January.
- Debt auctions: UK - 1-month, 3-month and 6-month government debt.
Market snapshot:
- Futures pricing shows a marked rise in the chance of a 25-basis-point Fed cut at the March meeting, according to CME Group's FedWatch tool.
- Global equities extended losses into a third day, with emerging markets under particular pressure and the KOSPI triggering a trading halt after a steep early fall.
- Bitcoin and silver staged partial recoveries following steep declines the prior day.