Global investors are still on edge despite a gain in equity futures and oil from the previous day’s sell-off as uncertainty around the new COVID-19 variant ahead of the U.S labour report.

Omicron is the new buzz word and uncertainty remains whether it will cause a market correction and avoid the much anticipated “Santa Rally” this year.

The U.S Federal Reserve has also added to uncertainty after Fed Chair Powell came close to indicating that the Fed will speed up its asset purchases. "At present, the market focus has been on Omicron and the potential that that can disrupt the world, but the real focus should be on the Fed and the rate policy. That's the biggest shock to come out of the last day or so," - Kerry Craig

Here is what’s expected this week:

The U.S Non-Farm Payrolls (NFP) 

U.S Labour data has seen a steady uptake in jobs and has been a focal point for the U.S Federal Reserve since the start of the pandemic.

New fears on how the new Omicron coronavirus variant will affect the labour market as come back as the focal point this week is firmly on the Jobs report this week. The U.S non-farm payroll (NFP) report will be released this Friday the 3^rd of December at 15:30 SAST.

The U.S non-farm payroll (NFP) report is intended to represent the total number of paid workers in the U.S. minus farm employees, government employees, private household employees, and employees of non-profit organizations.

Jobs number:

The U.S Non-Farm Payrolls for November are expected to increase slightly to 550K new jobs from the prior months 531K jobs added to the labour market. 

Hourly earnings:

The average hourly earnings (M/M) (Nov) data is expected to remain unchanged at 0.4% from the previous reading, while the average hourly earnings (Y/Y) (Nov) is likely to increase to 5.0%.

U.S. Unemployment Rate:

The U.S. Unemployment Rate (Nov) is widely expected to come in at 4.5% this Friday.

The unemployment rate measures the percentage of the total unemployed workforce and actively seeking employment during the previous month. The unemployment rate data point can be used as an indicator to see if an economic recovery is underway.

Key events to watch ahead of the U.S non-farm payroll (NFP) report:

• The U.S ADP Nonfarm Employment Change (Nov) – Today 15:15 SAST
• Fed Chair Powell testifies - Today 17:00 SAST
• ISM Manufacturing PMI (Nov) – 17:00 SAST
• Crude Oil Inventories – Today 17:30 SAST
• US Initial Jobless Claims – Thursday 15:30 SAST

The Wall Street 30 Technical Analysis

Markets are on edge but have seen a rebound on Wednesday morning as Asian equities gained from a 1-year low point with U.S Futures leading the charge. As discussed in our previous WS30 note, a break in the 35517-support level could target the base breakout at 35025.

The 35025 level is now resistance and will be watched closely as a rejection of this level could see another leg lower to the 34110-support level. On the flip side, we would need a price above the base zone and above the 35517-resistance level to negate the current downward trend.

• Price action is still in a downward trajectory on the 4H chart and still making lower highs and lower lows and could see the 34110-support in focus.
• The 50-day SMA (blue line) is trending lower and above the price action.
• The Relative Strength Index (RSI) is at the oversold boundary but could remain there for weeks on end and does not indicate a reversal just yet.

Current State / Chart Source: Wall Street 4H Timeframe - GT247 MT5 Trading Platform

Why is the jobs number important?

The Non-Farm Payrolls report (NFP) is treated as an economic indicator for people employed during the previous month, and the number being released will have a direct impact on the markets. In the United States, consumer spending accounts for most of the economic activity, and the Non-Farm Payrolls report represents 80% of the U.S. workforce. Farmers are excluded from the employment figures due to the seasonality of farm jobs.

Trading Term of the day:

Santa Claus Rally:

A Santa Claus rally describes a sustained increase in the stock market that occurs in the last week of December through the first two trading days in January. There are numerous explanations for the causes of a Santa Claus rally including tax considerations, a general feeling of optimism and happiness on Wall Street, and the investing of holiday bonuses. Another theory is that some very large institutional investors, a number of which are more sophisticated and pessimistic, tend to go on vacation at this time, leaving the market to retail investors, who tend to be more bullish. – Investopedia.

Take note: The outlook and levels might change as this outlook is released during the current days (Wednesday the 1^st of December 2021) U.S Market open.

When does the Non-Farm Payroll Announcement take place in South African time?

U.S Non-Farm Payrolls (NFP) report is live this Friday the 3rd December 2021 at 15:30 SAST

Take note: The outlook and levels might change as this outlook is released during the current days (Wednesday the 1^st of December 2021) U.S Market open.

Sources – MetaTrader5, Reuters, Investing.com, Investopedia.

Barry Dumas | Market Analyst at GT247.com

Barry has 12 years of experience in the financial markets. He enjoys educating clients on trading / investing and providing punchy technical analysis on securities. He currently holds a Wealth Management qualification and is studying towards becoming a Chartered Market Technician® (CMT) designation holder.

Disclaimer:

Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by Barry Dumas, Market Analyst at GT247 (Pty) Ltd t/a GT247.com (“GT247.com”) as general market commentary, and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. GT247.com does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information which we receive from third-party data providers. You must rely solely upon your own judgment in all aspects of your trading decisions and all trades are made at your own risk. GT247.com and any of its employees will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from the use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.