The U.S. job market cooled in December as interest rate hikes took effect, with job openings falling and initial jobless claims dropping to a two-month low. This is expected to continue if the Fed remains data-dependent when cutting rates. However, layoffs are low, and the unemployment rate is expected to stay below 4%, suggesting the economy is unlikely to tip into recession anytime soon. Financial markets are betting on the Fed cutting rates as early as March, partly supported by signs of an easing labour market.
EQUITY
Asian markets are looking positive, with profit-taking on Wall Street, although the Chinese market is still lagging. While the Nikkei and Malaysian markets looked healthy, the Hang Seng and Shanghai Composite were poised for weekly losses exceeding 1.5%. The focus now shifts to key U.S. job data, which could offer further clues on the Fed's rate-cut timeline and spark renewed volatility across the region that has been a drag.
GOLD
Gold shine dimmed on Friday, on track for its first weekly dip after it just made a recovery late last month. While the December jobs report, due later today, holds the key to the Fed's next move, bullion's immediate trajectory hinges on whether the greenback's rally has legs.
OIL
Crude prices closed lower Thursday, although geopolitical tensions and hopes for an economic recovery supported by potential Fed easing might see higher prices soon. While slower US inventory drawdowns and a rebounding dollar cast a shadow, supply disruptions in the Middle East kept prices under control. Attention now turns to US payroll data, which is expected to offer clues on the pace of interest rate cuts and future demand.
CURRENCY
The dollar soared on better U.S. labour market data and a scaling back of expectations for aggressive Fed rate cuts. While Asian currencies took a beating on the dollar's rally, a dovish shift by the Fed later in 2024 could offer them much-needed respite. Investors now await Friday's crucial nonfarm payrolls report for further clues on the Fed's trajectory.
