Investors Weigh NFP Friday, Geopolitics

March 29, 2022 09:38

Investment markets appear to be seeking a clear-cut direction as stakeholders weigh up geopolitical developments and the US Non-Farm Payroll job numbers set for release at the end of the week. 

Strong job numbers are the key to market confidence amid a hawkish Federal Reserve determined on a course of vigorous monetary tightening for the rest of the year. Provided that employment numbers stay at robust levels, there is reason to believe that the economy can withstand higher interest rates as the central bank battles inflation headwinds.  

“Indicators of economic activity and employment have continued to strengthen. Job gains have been strong in recent months, and the unemployment rate has declined substantially.” Federal Reserve March FOMC Statement. 

Given the high level of geopolitical risk and inflation, any disappointment in the ADP and NFP numbers may sour sentiment towards the USD. If job figures are better-than-expected, the US Dollar Index may see support. NFP releases may also move spot gold prices depending on investor reactions to the final results.  

Equities state of play 

Asian markets were mixed in overnight trading, with Shanghai’s exchange lower on the news of a staged COVID-19 lockdown. The pre-market mood towards European stocks awaits a clear direction with the FTSE subdued.  

Headline commodities drift 

Headline commodities drifted, with crude oil spot prices in a lull as Russia and Ukraine delegations meet in Istanbul for peace talks. Hopes are rising that a truce can be reached. Any positive signals on peace would likely put oil prices under downward pressure as supply fears would be relieved.  

Safe-haven assets spot gold and silver prices trended slightly lower in line with other commodities. There’s a sense of anticipation about the peace talks – if the current geopolitical risks lessen, the markets could change direction rapidly. Supply fears would likely ease along with any excess inflation in the crude oil markets. The opposite scenario also applies. If talks fail again, it’s reasonable to expect that safe-haven assets may retain their attraction and crude oil spot prices will probably stay volatile.  

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

Sarah Fenwick
Sarah Fenwick Financial Writer, Admirals London

Sarah Fenwick's background is in journalism and mass communications. She has worked as a correspondent covering Swiss Stock Exchange news and written about finance and economics for 15 years.