The US labor market is showing signs of job losses

By Wednesday, the Dow Jones (US30) rose by 0.86%, the S&P 500 (US500) gained 0.30%, and the Nasdaq (US100) closed 0.20% higher. Markets increased bets on Fed easing after the ADP report showed an unexpected decline of 32,000 jobs. The financial sector led strongly: Wells Fargo and Citi shares gained 3.5% each, while UnitedHealth jumped 4.7% thanks to improved expectations for costs and demand. Among tech companies, Marvell stood out, rising 7.9% on an optimistic prognosis for data centers and AI hardware, while Microsoft fell 2.5% after temporary concerns over reduced quotas for AI products.

The Canadian dollar strengthened to 1.39 per USD, reaching a monthly high thanks to US dollar weakness and signs of Canadian economic resilience. Stronger‑than‑expected GDP growth increased the likelihood of a pause in the Bank of Canada easing. Additional support came from rising oil and copper prices, which improved trade conditions despite weak manufacturing PMI.

Mexican peso firmed to 18.27 per USD, its highest since July, amid US dollar weakness and a resilient domestic labor market. Mexico’s low unemployment rate of 2.6% reduces the need for Banxico to ease policy quickly, supporting the attractiveness of high real interest rates.

European equities traded mixed on Wednesday. Germany’s DAX (DE40) fell by 0.07%, France’s CAC 40 (FR40) rose by 0.16%, Spain’s IBEX 35 (ES35) gained 0.68%, and the UK’s FTSE 100 (UK100) closed 0.10% lower. European markets were buoyed by optimism over Fed easing after weak US labor data, despite mixed ECB signals: Lagarde noted inflation nearing target, while Lane warned of risks of acceleration. Corporate news drove gains: ASML rose by 2.6% after rating upgrades, Inditex surged 9% on strong results, and Stellantis and Airbus climbed 7.7% and 1.5% respectively.

Swiss franc held near 0.80 per USD, close to multi‑year highs ahead of the SNB meeting. Inflation in Switzerland was unexpectedly low again, with core prices falling to a four‑year low, complicating the central bank’s task. With rates already at 0%, the SNB remains cautious about easing, wary of financial stability risks, though it leaves the option open. Policymakers signaled that a return to negative rates is unlikely, but policy adjustments may be needed if the expected moderate inflation rebound fails to materialize.

WTI oil rose above $59/barrel amid geopolitical tensions: Ukrainian attacks on Russian energy facilities and lack of progress in talks with Moscow heightened supply risks. Additional uncertainty came from the US signals toward Venezuela’s oil sector. However, gains were capped by signs of weak demand and rising US crude and product inventories (EIA data), pointing to potential oversupply.

Asian equities traded mixed yesterday. Japan’s Nikkei 225 (JP225) rose by 1.14%, China’s FTSE China A50 (CHA50) fell by 0.70%, Hong Kong’s Hang Seng (HK50) dropped by 1.28%, and Australia’s ASX 200 (AU200) gained 0.18%.

The Australian dollar climbed to 0.661 USD, a two‑month high, supported by unexpectedly strong domestic spending, which boosted expectations of another RBA rate hike in 2026. Household spending in October rose 1.3% versus 0.6% projections, reinforcing tightening prospects. At next week’s meeting, markets still expect the rate to remain at 3.6%, but the RBA’s tone may turn more hawkish amid overheating risks and persistent inflationary pressures.