The American stock markets traded slightly higher yesterday after mostly moving sideways during the trading day. On the macro front, new data shows that the American labor market continues to show strength, with job numbers increasing in October while layoffs decreased. However, the JOLTS report indicated that employers have not yet started hiring additional staff. Furthermore, the number of workers quitting their jobs rose to the highest level in 1.5 years, indicating increased confidence in the job market. A strong labor market is positive for inflation, as two members of the Federal Reserve mentioned yesterday that it is approaching their 2% target and that the labor market looks “stable.” One member hinted that he was open to a possible interest rate cut in mid-December. Investors are now looking towards evening macroeconomic data on employment and Friday’s job report. Among individual companies, Intel fell after the company’s CEO resigned on Monday, with Cantor Fitzgerald noting that this will not solve their problems. Korean companies also declined yesterday due to South Korean turbulence. The broad S&P 500 index closed up 0.1%, while the tech-heavy Nasdaq climbed 0.4% to a new record level. The Dow Jones Industrial Average fell 0.2%.
Commodities rose across the board yesterday. Oil climbed due to ongoing conflicts between Lebanon and Israel despite last week’s ceasefire, and Israel threatened to attack the Lebanese state if the truce with Hezbollah does not hold. The geopolitical situation has not yet affected oil exports from the Middle East, but the market is closely monitoring the situation between Iran and Israel, where an escalation could threaten Iran’s oil production. On Thursday, the Organization of the Petroleum Exporting Countries (OPEC) will hold a meeting on the future, where they are expected to decide to continue keeping oil production low until the end of the fourth quarter of 2025. WTI oil increased by 1.9 dollars to 70.0 dollars per barrel, while Brent oil climbed 1.8 dollars to 73.7 dollars per barrel.
Base metals all traded above the zero mark, with nickel being today’s winner, rising 2.2%, followed by copper and tin, which advanced 1.4% and 0.9%, respectively. Zinc traded up 0.6% and lead up 0.5%, while aluminum performed the worst, increasing by 0.3%. Gold also closed slightly higher for the day, with the focus on Friday’s job report and yesterday’s JOLTS report easing concerns that the labor market may have slowed down. A strong jobs report on Friday could lead the Fed to be more cautious about lowering interest rates; however, the market believes there is a 74% chance that the Fed will cut rates by 25 basis points in December. Gold rose by 2.9 dollars to 2,641.4 dollars per ounce.
Among individual American stocks, Intel fell by 6.1%, while Korean companies Coupang and Posco declined by 3.7% and 4.4%, respectively. Telecommunications company AT&T rose by 4.6% after announcing a share buyback and education program worth 40 billion dollars over the next three years. Axon Enterprise increased by 5.3% and Palantir by 6.9%. Among the fabulous seven, Nvidia traded up 1.2%, Meta up 3.5%, and Tesla down 1.6%. The US ten-year bond yield increased by 3 basis points to 4.23%.
The Asian markets started Wednesday on a downward trend, with South Korea shaking the market. Yesterday, South Korea declared a state of emergency with martial law after the president accused the opposition of being “hostile to the state” and sympathizing with North Korea. However, the South Korean parliament voted to lift the state of emergency later in the day, and the president was forced to comply. The country’s central bank has announced that it is ready to inject additional liquidity to stabilize the market. In China, the purchasing managers’ index for the services sector unexpectedly fell in November to 51.5 from 52.0 the previous month, while the index for the combined manufacturing and services sector rose from 51.9 to 52.3. In Japan, the composite purchasing managers’ index rose to 50.1 from 49.6 the previous month. At 07:45, the Japanese Nikkei 225 index is up by 0.1%, while the Chinese Shanghai index is down by 0.7% and the Hang Seng index is down by 0.2%.
On the Stockholm Stock Exchange, Clas Ohlson reported on its second quarter in its fiscal year, with operating profit amounting to 307 million kronor compared to the expected 309.7 million kronor. Total sales were 2.8 billion kronor, with net sales reaching 1,361 million kronor. Systemair also reported on the second quarter with an operating profit of 347 million kronor, where expectations were at 315 million kronor. Net sales amounted to 3,146 million kronor, while net income was 236 million kronor, higher than the expected 221 million kronor.
In terms of today’s fresh recommendations, Barclays leads the way by raising the target price for SKF to 239 kronor (from 235), Sandvik to 245 kronor (from 225), Trelleborg to 460 kronor (from 448), and Alfa Laval to 545 kronor (from 520), reiterating the overweight recommendation for all four. Atlas Copco receives a raised target price to 170 kronor (from 154), with the neutral rating reiterated, while Assa Abloy’s target price is raised to 300 kronor (from 284), maintaining the underweight recommendation. Barclays Capital upgrades its recommendation for Epiroc from underweight to overweight with a target price of 205 kronor and raises its target price for ABB to 42 Swiss francs (from 40), reiterating the underweight recommendation.
On the macroeconomic front, Wednesday will be an intense day starting in Japan at 01:30 and China at 02:45 with the composite purchasing managers’ index for the manufacturing and services sectors in November, which rose to 50.1 and 52.3, respectively. Swedish PMI figures for November will be announced at 08:30, followed by the Eurozone at 10:00 and the UK at 10:30. In the US, the non-farm payrolls change will be disclosed at 14:15, and November’s PMI figures at 15:45. Furthermore, the ISM non-manufacturing purchasing managers’ index will be reported at 16:00, and crude oil inventories at 16:30. At 19:45, Federal Reserve Chairman Jerome Powell will deliver a speech.
With a mix of economic data, corporate earnings, and geopolitical events impacting global markets, investors are closely monitoring developments to navigate the dynamic landscape and make informed decisions. Stay tuned for further updates and analysis as the market continues to evolve.