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WEEKLY ROUND-UP Thru Oct 6th 2023: “October Kicks off with a Bang!”

Hey Folks, well, as we move into the fourth Qtr. of 2023 Oct gets things started with a bang! Get my take here in this week’s round-up and where we can go in Q4.

Weekly Sound Bites

US indexes finished mixed over another week of top-heavy trading in which large-cap growth stocks—and the mega-cap information technology and internet stocks, in particular—widely outpaced the rest of the market. Volumes were generally subdued through most of the week, as investors awaited the closely watched official nonfarm payrolls report on Friday, with many appearing to hope that it would show another decline in hiring that would, in turn, convince Federal Reserve policymakers to forego another rate hike. It showed employers added 336,000 nonfarm jobs in September, which was roughly double the consensus estimates.

The details in the jobs report offered a more nuanced picture, however, which appeared to foster a market rebound soon after equity trading began at 9:30 a.m. Average hourly earnings rose 0.2% in the month, bringing down the year-over-year gain to 4.2%, its lowest level since June 2021. The data suggested that increasing supply instead of rampant demand for workers was driving the labor market, making for a more benign inflationary environment. On Wednesday, payrolls processor ADP also offered a much different picture of the job market, with its tally of private sector payrolls only expanding by 89,000 in September, the smallest increase since January 2021.

The yield on the benchmark 10-year U.S. Treasury note spiked to another 16-year high of around 4.89% in early trading Friday but fell back somewhat as equities rallied later in the morning.

Both official and private-sector data suggested that the eurozone economy likely stumbled in the third quarter. The final Composite Purchasing Managers’ Index (PMI) compiled by S&P Global came in at 47.2 in September, marking a fourth consecutive monthly contraction. German industrial orders in August bounced back to 3.9%, after dropping 11.7% in July. Meanwhile, German exports fell 1.2% sequentially in August, substantially more than forecast, following a 1.9% decline the previous month due to weak global demand.

In Japan, equities came under pressure amid surging U.S. bond yields and concerns that central banks will remain hawkish for longer. In Japan, economic data releases showed that real wages and consumer spending continued to fall in August, also weighing on sentiment. The yen finished the week stronger, hovering around JPY 149 against the U.S. dollar. Meanwhile, the yield on the 10-year Japanese government bond (JGB) rose to 0.80%, a 10-year high, from 0.76% at the end of the previous week. Deterioration in manufacturing conditions gathered pace in September, with the manufacturing PMI declining to 48.5 from 49.6 the previous month, as both output and new orders fell sharply.

And in China, financial markets were closed last week for the Mid-Autumn Festival and National Day holiday and will reopen Monday, October 9. China’s factory activity returned to expansion for the first time since March, the latest signal that the economy may have bottomed. The official manufacturing PMI rose to an above-consensus 50.2 in September from 49.7 in August. The nonmanufacturing PMI expanded to a better-than-expected 51.7 from 51.0 in August.

Enjoy This Weeks’s Round- up

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