Live Markets: Europe's STOXX 600 worst week since March 2020

Electricite et Eaux De Madagascar SA

04/03/2022 17:17

* Main U.S. indexes slide, but off lows; FANGs, banks hit
harder
    * Financials weakest major S&P 500 sector; utilities lead
gainers
    * Euro STOXX 600 index falls ~3.5%
    * Dollar, gold, crude rise; bitcoin down
    * U.S. 10-Year Treasury yield slides to ~1.72%

    March 4 - Welcome to the home for real-time coverage of
markets brought to you by Reuters reporters. You can share your
thoughts with us at markets.research@thomsonreuters.com
    
    
    EUROPE'S STOXX 600 WORST WEEK SINCE MARCH 2020 (1150
EST/1650 GMT)
    A weekly loss of 7% makes this the worst week for the
pan-European STOXX 600  .STOXX  since the March 2020 Covid-19
crash. 
    Significant escalations in the Russia/Ukraine war saw the
week end on a low, with the index down around 3.5 on Friday. The
STOXX 600 is now down 14.7% from its early-January record
closing high.
    Losses were broad based with Travel and leisure  .SXTP ,
Industrials  .SXNP  and financial services  .SXFP  hit
especially hard.
    Of note, Euro zone banks  .SX7E  are now off 30% just since
their mid-February closing high. Autos  .SXAP  are down 26% from
their mid-January closing peak. 
     
    (Lucy Raitano)
    *****
    
    EVERYTHING'S (MOSTLY) COMING UP ROSES: JOBS REPORT DEEP DIVE
(1127 EST/1627 GMT)
    Curmudgeons and pessimists looking for reasons to jeer at
Friday's employment report had their work cut out for them.    
    U.S. payrolls grew  USNFAR=ECI  by 678,000 in February,
breezing past the 400,000 consensus and marking an unexpected
acceleration from January's upwardly revised 481,000 job adds.
 urn:newsml:reuters.com:*:nL2N2V633B
    "Hiring conditions proved to be favorable in February as
employers were able to attract workers back into the labor
force," writes Charlie Ripley, senior investment strategist at
Alliance Investment Management. "Looking into the details, job
additions were broad based and payrolls in pandemic-affected
sectors rebounded as expected."
    "No matter how you slice the report, the results look very
strong from all angles," Ripley adds. 
    The print marked the fifth consecutive upside surprise and
the tenth-straight reading above the 400,000 mark. 
    It means the economy has recovered all but 2.1 million of
the 22 million it hemorrhaged at the onset of the COVID crisis.
    
    
    The unemployment rate  USUNR=ECI  fell more than expected,
shaving off 0.2 percentage points to 3.8%, the lowest level
since February 2020, the month before abrupt shutdown mandates
hobbled the economy overnight.
    Broken down by length of joblessness, the biggest decrease
occurred on the shorter end, with those unemployed for fewer
than 5 weeks accounting for about one-third of the total. Those
out of work for fewer than 15 weeks account for about 62% of the
unemployment pie, a state of affairs which suggests employers
are growing increasingly reluctant to hand out pink slips amid a
tight labor market.
    
    
    One of the brighter stars of this upbeat report was the
labor market participation rate, which inched up to 62.3%.
    While only a 0.1 percentage point advance, it does suggest
Americans are returning from the sidelines, a phenomenon which
typically puts upward pressure on the unemployment rate. 
    The fact that it fell suggests those who are jumping back
into the job pool are quickly finding work.
    "The labor force participation rate was arguably the most
noteworthy component of today’s release, which came in at its
highest level since March 2020." says Peter Essele, head of
portfolio management at Commonwealth Financial Network. "More
individuals on payrolls means greater aggregate purchasing power
from consumers."
    "If the current trend continues, today’s equity markets will
look like a bargain by year end," Essele adds.
     
    
    But wage growth, among the stickier varieties of inflation,
was probably the show's headliner, surprising analysts by doing
nothing.
    Average earnings held flat for the month, and year-over-year
wage growth unexpectedly decelerated to 5.1% from January's
downwardly revised 5.5%.
    "The good news is hourly wages were actually flat and
today’s numbers seem to be diminishing that fear of wage
inflation," said Peter Cardillo, chief market economist at
Spartan Capital Securities. "That's something that the Fed is
obviously (going) to look at very carefully."
    But does it portend a more dovish Fed?
    "It does not change the picture for March," Cardillo adds.
"Even with the current (geopolitical) circumstances, the Fed
cannot risk not raising rates."
    Cardillo's sentiment is echoed by the chart below, which
shows wage growth along with other major indicators running
red-hot, cruising well above Powell & Co's average annual 2%
inflation target:
     
    
    In other good news, the disparity in joblessness among
racial and ethnic lines narrowed a bit last month.
    Unemployment ticked down across the four major racial/ethnic
categories, the rate among Black and Hispanic workers fell most,
by 0.3 and 0.5 percentage points, respectively.
    While at 6.6% and 4.4%, those numbers are above the headline
rate, the White/Black jobless gap shrank to 3.3 percentage
points.
    Despite the ongoing disparity, their rate of recovery can be
attributed to fiscal stimulus packages passed last year,
according to Heidi Shierholz, president of the Economic Policy
Institute.
    "All groups are seeing far (far!) faster recoveries than
they did following the Great Recession, and that’s about CARES
and ARPA," Shierholz tweeted. "The importance of those policies
to labor market healing following the worst recession in our
lifetime cannot be overstated."
     
    
    Tenacious 'Debbie Downers' could find some less rosy news in
the so-called 'real unemployment rate,' which inched up to 7.2%
from 7.1% a month ago.
    This marked the first uptick since the stratospheric spike
of April 2020.
    This datum adds those only marginally attached to the labor
market to the unemployment total, last month's increase appears
to be largely attributable to the growing number of workers
whose gigs are, for economic reasons, part time.
    
    
    To land the plane, market participants were largely looking
at the jobs report through the lens of what is likely the next
big catalyst: the Fed's upcoming monetary policy meeting.
    The dominant opinion appears to be that it hasn't changed
rate hike expectations.
    "This report will make no difference to the Fed’s decision
later this month; they'll hike by 25 basis points," says Ian
Shepherdson, chief economist at Pantheon Macroeconomics, who
adds that the FOMC's more dovish members "will be happy to see
rising participation and the soft (wage growth) number, because
they add weight, at the margin, to the idea that the labor
market might not be a source of second-round inflation
pressure."
    Wall Street's jobs report bounce was short-lived, having
faded by the opening bell.
    Geopolitical worries are dominating sentiment, with all
three major U.S. stock indexes sharply lower in late morning
trading.
    
    (Stephen Culp)
    *****
    
    EMERGING MARKET FEAR AT MULTI-MONTH HIGHS (1045 EST/1545
GMT)
    Emerging market stocks have outperformed U.S. stocks so far
this year, but traders in the options market are exhibiting a
greater degree of nervousness around EM stocks, relative to 
U.S. stocks, than they have done in 7 months.
    The iShares MSCI Emerging Markets ETF  EEM.P , one of the
largest ETFs tracking EM stocks is down 8.4% for the year,
compared with a 9% decline for the SPDR S&P 500 ETF Trust
 SPY.P . 
    Still, traders are more fearful of a pullback in EM stocks
than they are about weakness in U.S. large caps. 
    The Cboe Emerging Markets Volatility Index  .VXEEM  is
trading at a 7 point premium to the Cboe Volatility Index
 .VIX , the largest the gap has been since early August.
    Excessively defensive positioning often acts as a contrarian
signal of an approaching near-term bottom in prices. The last
time the spread between VXEEM and VIX rose this high for more
than a day, was in July and EEM shares were up 1.3% a week
later. 
    With little sign of Russia-Ukraine crisis letting up,
however, EM stocks might remain pressured for some time.
    
    
    (Saqib Ahmed)
    *****
    
    U.S. STOCKS FALL AS UKRAINE CONCERNS INTENSIFY (1005
EST/1505 GMT)
    Wall Street's main indexes are down in early trade on Friday
as concerns over the intensifying conflict in Ukraine
overshadowed data that showed an acceleration in jobs growth
last month.  .N 
    Financials  .SPSY , and especially banks  .SPXBK , are among
the hardest hit groups so far. 
    Energy  .SPNY  is the sole gaining major S&P 500  .SPX 
sector. NYMEX crude futures  CLc1  are rallying around 5%.
Though, amid a flight-to-safety, the U.S. 10-Year Treasury yield
 US10YT=RR  is sliding around 10bps to the 1.73% area.
    Of note, the Nasdaq Composite  .IXIC  has once again backed
away from its descending 30-day moving average  urn:newsml:reuters.com:*:nL2N2V60H0
 urn:newsml:reuters.com:*:nL1N2V414E:
    
    
    This moving average perfectly capped strength on Thursday,
leading to renewed weakness. It now stands as resistance at
around 13,815.
    Here is where markets stand in early trade:
    
    
    (Terence Gabriel)
    *****
    
    U.S. STOCKS FUTURES UNNERVED AFTER NUKE PLANT, NONFARM
PAYROLLS NEWS (0900 EST/1400 GMT)
    U.S. stock index futures are lower on Friday as fears over
the war in Ukraine deepen, putting the main indexes on track for
weekly declines.  .N 
    Futures did improve somewhat after the release of the Labor
Department's February jobs data. However, they have since
weakened again.
    February nonfarm jobs came in above estimates, while the
unemployment rate slipped. Average hourly earnings were cooler
than estimates:
    

    Equities globally were already weaker with safe-havens in
demand after Russian invasion forces seized Europe's biggest
nuclear power plant on Friday in heavy fighting in southeastern
Ukraine, triggering global alarm, but a huge blaze in a training
building has been extinguished and officials said the facility
was now safe.  urn:newsml:reuters.com:*:nL2N2V700O
    Regarding the jobs data, Chris Zaccarelli, chief investment
officer at Independent Advisor Alliance said:
    "It's a very strong report. It’s going to be overshadowed by
events in Ukraine and another sign the job market is hot and
that the Fed needs to move more quickly to start raising rates."
    Zaccarelli added, "There's no doubt we've got a hot job
market and high inflation. Regardless of what's happening in
Ukraine, the Fed must move quickly."   
    Here is your premarket snapshot:
   
 
    (Terence Gabriel, Sinéad Carew)
    *****  
    
    FOR FRIDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EST/1400 GMT
- CLICK HERE:  urn:newsml:reuters.com:*:nL2N2V71AS

    
    
    
    
    
    
    
    

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
NFP03042022    https://tmsnrt.rs/3hDHjRa
premarket03042022    https://tmsnrt.rs/3sGM829
IXIC03042022B    https://tmsnrt.rs/3sFoH9n
earlytrade03042022    https://tmsnrt.rs/3MgJRCC
VXEEM - VIX spread    https://tmsnrt.rs/3vyEhWq
Nonfarm payrolls    https://tmsnrt.rs/3pF8O13
Unemployment duration    https://tmsnrt.rs/3ttqYE2
Labor market participation    https://tmsnrt.rs/3MpxJ2c
Inflation    https://tmsnrt.rs/3hBjMA8
Unemployment by race and ethnicity    https://tmsnrt.rs/3HHL1ng
Underemployment    https://tmsnrt.rs/3IJcYfP
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Terence Gabriel is a Reuters market analyst. The views
expressed are his own)