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What happened last week?
The TSX made marginal gains, the S&P 500 rose 1 percent, and the NASDAQ jumped over 3 percent for the week. The Dow was the only major index in our grid to lose value and is down about 1 percent since its record setting closing level on Wednesday. The Canadian dollar lost value against its U.S. counterpart, gold, oil and government bonds fell.
Equity markets, in particular, were influenced by the release of jobs data in Canada and the U.S. and the impact of those announcements on upcoming interest rate decisions.
Canadian employment increased by 51,000 in November following little change in October, according to the Labour Force Survey released on Friday. The employment rate was unchanged at 60.6%. The unemployment rate rose 0.3% to 6.8% indicating an increase in job seekers. The unemployment rate has risen 2 percentage points since July 2022.
Despite the large job gains, the increase in labour force participation (people aged 15 and older who are employed or seeking jobs) caused a bump in the unemployment rate. The mixed jobs reports still have financial markets and analysts predicting a half-percent interest rate cut on December 11th. CBC and LFS
The U.S. nonfarm payroll report showed employment rose 227,000 in November and the unemployment rate was unchanged at 4.2%. Employment increased in health care (+54,000), leisure and hospitality (+53,000), government (+33,000) and social assistance (+19,000) and fell in retail trade (-28,000). Job creation was above expectations and October’s flat report. Since last November the number of unemployed persons has risen by nearly 1 million to 7.1 million from 6.3 million when the unemployment rate was 3.7 percent, which was a historically low level.
BLS release CNBC and payrolls
As the markets closed on Friday the likelihood of a ¼ point rate cut by the Fed on December 18th had risen to 85% according to CME Group's Fed Watch tool. Upcoming U.S. inflation data will cause an update to rate expectations.
What’s ahead for this week and beyond?
In Canada, building permits, capacity utilization, manufacturing and wholesale sales will be reported. The Bank of Canada will release an interest rate decision and hold a press conference on Wednesday morning.
In the U.S, wholesale inventories, Consumer Price Index (CPI), Producer Price Index (PPI) import and export price indexes for November are scheduled for release.
Globally, Japan’s Gross Domestic Product (GDP), U.K.’s GDP, industrial and manufacturing production, China’s consumer and producer inflation, imports, exports and trade balance will be announced. The European Central Bank (ECB) will release an interest rate decision on Thursday before local markets open.
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