US OUTLOOK/OPINION: Payrolls To Lose Weather Boost And Returning Strikers [1/2]
May-01 19:01
- Nonfarm payrolls growth is expected at 135k in April per Bloomberg consensus after a firmly stronger than expected 228k in March. April is likely to lose two tailwinds that were present in March.
- Firstly, we’re unlikely to see a repeat of March’s favorable weather boost. San Francisco Fed staff estimate a huge 152k boost from weather in March after a 14k drag in February and a heavy 100k drag in Jan (using its regional-heterogeneity model). Applying these estimates sees a clear weather-adjusted downward trend in payrolls since a surge in December to 330k, with 211k in Jan, 131k in Feb and just 76k in Mar. These are subjective calculations, with UBS for example seeing a combination of March pull forward and cooler April weather holding April payrolls down by 25-45k after a circa 50k boost in March.
- For a real-time estimate of weather disruption with the April report, we’ll again check the separate household survey question on those not able to work due to bad weather in the reference period. The 87k last month was the lowest for a March since 2000.
- Another positive factor that won’t repeat itself this month is the return of striking workers, with April still seeing 5k on strike in contrast to March seeing a reduction from the 20k in February. On the other hand, some see a temporary positive boost from the timing of a late Easter this year (e.g. Morgan Stanley estimating this at 20k).
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EURJPY TECHS: Trend Structure Remains Bullish
Apr-01 19:00
- RES 4: 165.43 High Nov 8
- RES 3: 164.90 High Dec 30 ‘24 and a key medium-term resistance
- RES 2: 164.55 High Jan 7
- RES 1: 164.19 High Mar 18 and the bull trigger
- PRICE: 161.43 @ 16:02 GMT Apr 1
- SUP 1: 160.78 Low Apr 1
- SUP 2: 160.72 50-day EMA and pivot support
- SUP 3: 158.90 Low Mar 10
- SUP 4: 158.00 Round number support
A bullish trend condition in EURJPY remains intact and recent weakness between Mar 18 - 20 appears corrective. This sell-off allowed an overbought condition to unwind. Pivot support is 160.72, the 50-day EMA. A break of it would signal potential for a deeper retracement. For bulls, sights are on 164.08, the Jan 24 high. It has been pierced, a clear break of this hurdle would strengthen a bullish condition and open 164.90, the Dec 30 ‘24 high.
US STOCKS: Late Equities Roundup: Off Midday Highs, Focus on Reciprocal Tariffs
Apr-01 18:56
- Stocks have retreated from midday highs as profit taking support evaporates ahead of Wednesday afternoon's reciprocal tariff announcement from the White House Rose Garden (1600ET est). Off morning lows, the DJIA currently trades down 280.75 points (-0.67%) at 41719.65, S&P E-Minis down 21 points (-0.37%) at 5632.25, Nasdaq down 13.8 points (-0.1%) at 17285.42.
- Health Care and Financial sectors continued to underperform in late trade, pharmaceuticals weighing on the the former with Johnson & Johnson -6.45% after courts rejected a $10B bankruptcy plan tied to the company's talc litigation. Meanwhile, Moderna declined -3.99%, Eli Lilly & Co -3.25%, Biogen Inc -3.05% and Merck & Co -2.94%.
- The Financial sector was weighed down by M&T Bank Corp -2.24%, KeyCorp -2.13%, Wells Fargo -1.84%, Citizens Financial Group -1.81% and US Bancorp -1.63%.
- Reminder, banks will kick off the latest earning cycle on Friday, April 11.
- On the positive side Consumer Discretionary and Communication Services sectors continued outperformed in the first half, a mix of autos and apparel buoyed the former with Tesla +4.11%, Tapestry +2.70%, Ralph Lauren +2.63% and NIKE +2.11%.
- Interactive media and entertainment shares supported the Communication Services sector with Alphabet +0.99%, Meta Platforms +0.70% and AT&T +0.60%.
COMMODITIES: Crude Ticks Down, Gold Retreats From Fresh Record High
Apr-01 18:35
- Crude markets are edging lower, although the market lacks a clear trajectory. Concerns of weaker economic growth from looming US tariffs weigh against sanction threats against buyers of Russian and Iranian oil.
- WTI May 25 is down by 0.5% at $71.1/bbl.
- US reciprocal tariffs are to be announced on Wednesday. Press secretary Leavitt said that there would be “no exemptions at this time”.
- From a technical perspective, the sharp rally in WTI futures yesterday undermines the medium-term bearish condition and instead signals scope for a continuation higher near-term.
- This rally has exposed the next key resistance at $72.91, the Feb 11 high. Clearance of this level would strengthen the bullish theme.
- On the downside, initial firm support to watch lies at $68.99, the 20-day EMA. A breach of this level would signal a potential reversal.
- Meanwhile, spot gold has retreated from a fresh record high, with the yellow metal currently 0.2% lower on the session at $3,118/oz.
- Earlier in the session, gold had risen to a new high of $3,149 ahead of President Trump's trade tariffs announcement tomorrow. Gold remains 19.5% higher YTD, amid concerns over mounting geopolitical and trade tensions.
- The trend condition in gold remains bullish, with sights on $3,151.5 next, a Fibonacci projection. Support to watch lies at $3,015.6, the 20-day EMA. A pullback would be considered corrective.
