Fed Decision, ADP, Zhengzhou Lockdown - What's Moving Markets

Fed Decision, ADP, Zhengzhou Lockdown - What's Moving Markets

Fed Decision, ADP, Zhengzhou Lockdown - What's Moving Markets

The US Federal Reserve is expected to raise its key interest rate by 75 basis points in its efforts to tame inflation, amid hopes that Fed Chair Jerome Powell will signal a slowing tightening of monetary policy at future meetings. ADP releases its estimate of private sector recruitment in October, a day after mixed reports on job openings from the Department of Labor. Europe's PMI continues to fall further in contraction territory as the world's largest shipping line warns the pandemic party is finally over. And Zhengzhou, home of the world's largest iPhone assembly line, is shutting down for a week, pouring cold water on a rumor of China's zero-COVID strategy. Here's what you need to know about the financial markets on Wednesday, November 2.

1. Fed Decision Day. Will the first signs of spindle come?

The Federal Reserve is set to raise the target range for the fed funds by 75 basis points to 3.25-4.00% when its two-day meeting ends at 14:00 ET (18:00 GMT).

That's almost all it takes, given recent guidance from Fed officials and a raft of data showing inflation dynamics, which are still too strong for comfort. However, recent signs of a slowdown, especially in interest-rate-sensitive sectors of the economy such as real estate, have encouraged hopes that Fed Chair Jerome Powell will talk about slowing the pace of tightening in his regular press conference. will be able to.

Treasury yields were supported on Tuesday after falling sharply on anticipation of the start of a 'pivot'. That rally in bonds created the risk that Powell -- who has been in constant flurry in recent months -- could again disappoint such hopes. As of 06:30, the benchmark 10-year Treasury note was trading at 4.06%, down from a high of 4.34% two weeks ago.

2. ADP October payrolls, challenger job cuts survey to shed more light on labor market

Markets will get a preview of labor market trends in October, two days before the government's payroll data is published, ahead of the Fed's decision. ADP's survey of private sector recruitment is expected to show a slight slowdown last month, with consensus forecast for a profit of 195,000, down from 208,000 in August.

The Labor Department's Tuesday Job Openings and Labor Turnover Survey showed a small but, nonetheless, clear decline in quitting continued, suggesting that finding good new jobs is getting harder and the desire to leave a bird in hand is weakening. has been The economy slows down.

The Challenger Job Cuts Survey is also scheduled to be released at 07:30 ET, while weekly data from the Mortgage Bankers Association will show mortgage rates are kept above 7% last week after breaking that level for the first time in 20 years or No.

3. Stocks ready to open flat while the market waits for the Fed; Insurers in focus after PRU hit

US stock markets are set to open flat, with the tech-heavy Nasdaq 100 reversing its underperformance after better-than-expected quarterly numbers from Uber (NYSE:UBER) on Tuesday.

As of 06:15 ET, the Dow Jones futures were effectively unchanged, while the S&P 500 futures were down 0.1%, and the Nasdaq 100 futures were up 0.3% after falling 0.9% on Tuesday.

Stocks to be in focus later include Advanced Micro Devices (NASDAQ:AMD), which in after-hours trading Tuesday after forecasting fourth-quarter revenue below consensus forecasts due to an apparent slowdown in PC sales and other gadgets. fell in. Prudential Financial (NYSE:PRU) is set to open under pressure even after being hit by rising interest rates. Rivals MetLife (NYSE:MET) and Allstate (NYSE:ALL) announced their earnings Wednesday after the bell.

CVS (NYSE: CVS), Humana (NYSE: HUM) and KFC owners Yum! Brands (NYSE:YUM) heads the list of early reporters, while Qualcomm (NASDAQ:QCOM), Booking (NASDAQ:BKNG), and lithium miner Albemarle (NYSE:ALB) top the list of late.

4. The Party Is Over (For Shipping Anyway)

The party has formally ended for the global shipping industry. Danish shipping giant AP Möller - Maersk (CSE: MAERSKb) warned overnight that global container demand will fall by up to 4% this year, as the pandemic's boom fades and world supply chains are brushing off their remaining wrinkles. gives. Maersk had previously estimated that volumes would remain at 2021 levels.

The slowdown in world trade is just one reason why Europe's export-heavy economy continues to weaken. The final purchasing manager indices across the region showed a sharp drop in new orders for Germany's manufacturing sector in October (although the German labor market needs workers as much as the minimum 8,000 increase in the seasonally-adjusted unemployment rate).

French, Spanish and Italian manufacturing joined their German counterparts in falling more deeply into the PMI contraction zone.

5. Oil slips as Zhengzhou lockdown provides zero-COVID reality check.

As of 06:30 ET, US crude futures were down 0.5% at $87.89 a barrel, while Brent futures were down 0.5% at $94.11 a barrel. The actual news flow regarding Chinese demand, if anything, has gone in the other direction: Earlier on Wednesday, city officials called the economy zone of Zhengzhou airport - for the world's largest iPhone assembly plant - a weeklong Closed due to a COVID outbreak.

Elsewhere in commodities, wheat prices reversed their gains on Monday after Russia re-joined a UN-sponsored deal on guaranteeing safe passage for exports.

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