The ending week was full of significant events. Publication of important economic data, speeches by members of the Fed, the President of the ECB and of course the first debate between Donald Trump and Joe Biden at the finish line of the election race.
The US stock market rose on the back of positive ADP job creation, revised Q2 GDP figures, strong Chicago PMIs in September and pending real estate sales in August. This data played a more important role in the local reversal in demand for risky assets than the speeches of several members of the Federal Reserve and ECB President Christine Lagarde and the unimpressive first debate between Biden and Trump. Investors have turned their attention to the economic statistics, reasonably believing that the presidential debate, which did not reveal an apparent leader, should not be taken into account. Still, better economic statistics can not be ignored.
On Friday, investors were focused on US employment rate for September. The US economy was expected to receive 850K new jobs in September and a decrease in the unemployment rate to 8.2% from 8.4%. After the ADP data came out on Wednesday, showing the growth of new jobs by 749K in the nonfarm sector against 481K in August, and weekly jobless claims fell to 837K from 873K, an apparent local reversal in the stock market happened. Against this background, the three major American stock indices are ending the week with confident growth.
Assessing the high probability of better than expected data on unemployment from the Ministry of Labor, I believe the stock market’s growth will continue, not only today but early next week.
Thoughts and conclusions:
I think that there is a high probability of the change in investor sentiment from negative to positive, which can only be strengthened by positive NFP data, will give the American stock market a reason to continue growing next week. It could also lead to a recovery in both European and Asian markets.