U.S. JOBLESS CLAIMS: EXPECT THE UNEXPECTED (1036 GMT) It's starting to look more and more likely that the United States could slip into a recession, the odds of which have been rapidly sped up by the mini-banking crisis and recent data all pointing to the Federal Reserve's tightening cycle taking a toll. The main focus for the week lies squarely on labor market indicators.
A report on Thursday is expected to show weekly jobless claims rose to 200k in the week ending April 1, from the prior week's 198k but economists at Goldman Sachs said, "don't be surprised if initial jobless claims jump." Taking into account the distortions in seasonal factors, GS says initial claims could jump to over 240k, warning there could be a large but illusory increase in reported initial claims over the next few months.
GS notes that rather than reflecting genuine changes in the pace of layoffs, these figures have instead shown distortions to the seasonal adjustment factors caused by extreme volatility during the pandemic over the last year.
And if the problem is not corrected in this reading of jobless claims, then GS expects to see a much more modest increase roughly in the 200k to 210k range.
But jobless claims would be the tip of the iceberg that is the monthly reading of the U.S. Labor Department's non-farm payrolls data.
Expectations are for a rise of of 239k in March down from February's 311k increase, while the unemployment rate is expected to remain unchanged at 3.6%. The release lands on Friday, when U.S. stock markets, and most markets around the world, are shut for Good Friday. "The fact that the U.S. jobs data – which is the most watched data point in the entire world - is scheduled on Good Friday is disquieting," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
"For those markets that will still be up and running, the trading volumes will be thin, therefore the price action posterior to the data will likely be exacerbated by the lack of volumes."
(Shreyashi Sanyal, Medha Singh)
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STOXX RISES ON GERMAN INDUSTRIAL PRODUCTION JUMP (0828 GMT) European shares are on the rise, ahead of a long Easter weekend break, as data showing German industrial production rose significantly more than expected offset fears of a recession in the United States, the world's biggest economy, following weak economic data this week. German industrial production rose 2% in February, due in part to a rise in vehicle manufacturing. In a Reuters poll, analysts had pointed to a increase of only 0.1%.
The STOXX 600 rose 0.5%, with real estate index , long battered by rising interest rates, rising 1.5%. Risk sensitive travel stocks are up 1.4%, while miners and oil & gas are each up around 1%.
(Joice Alves)
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WEARY MARKETS WARY OF RECESSION (0652 GMT) Another set of weaker-than-expected U.S. economic data has investors spooked at the prospect of a looming recession, crimping risk appetite as traders hunker down and wait for the always-important non-farm payrolls data on Friday.
Asian stocks sagged, while the dollar was on the front foot as investors kept their risk-off hat ahead of the long weekend. Oil prices eased after the shock at the start of the week from OPEC+ to cut production. Futures hint at a muted open in Europe, with the pan-European STOXX 600 index aiming to break its losing streak this week. European equities had a stellar start to the year but the March madness due to the banking turmoil has weighed. The string of weak U.S. economic data this week has emboldened bets that the Fed may just be ready to pause its tightening policy, with markets still pricing more than 50% chance of the central bank standing pat when it next meets in May.
Data from China served as a bit of a bright spot, with March services activity in the country revving up at the quickest pace in 2-1/2 years on robust new orders and job creation and a consumption-led post-COVID recovery.
There are concerns though that the recovery in China may not last long in the face of geopolitical tensions as well as financial worries outside the country.
Meanwhile, UBS executives sought to assure investors on Wednesday that Switzerland's largest bank can make its shotgun takeover of Swiss rival Credit Suisse work. In corporate news, FedEx will consolidate its separate delivery companies into a single entity as it looks to cut costs and better compete with United Parcel Service and Amazon.
Canada's TD Bank Group is the most shorted banking stock globally, data provider ORTEX's calculations showed, with hedge fund bets against the company at $4.2 billion. Analysts are concerned about the bank's exposure to U.S. regional lenders.
Key developments that could influence markets on Thursday:
Economic events: UK all sector PMI for March; S&P Global Cons PMI for the Eurozone, Germany and France; UK Halifax house prices for March
(Ankur Banerjee)
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EUROPEAN FUTURES FLAT AS INVESTORS WEIGH U.S. DATA (0648 GMT) European futures are about flat as investors weighed how pivotal U.S. jobs data coming out on a stock trading holiday would impact Federal Reserve policy, after a raft of sluggish economic data this week. The closely watched U.S. non-farm payrolls report on Friday, when many markets globally are closed, will follow disappointing services sector data from the Institute for Supply Management (ISM) and private employment figures on Wednesday, as well as a slump in U.S. March manufacturing activity at the start of the week. Globally, equity investors were inclined to take money off the table after recent strong gains and with many global markets heading into a holiday for Good Friday.
(Joice Alves)
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