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US stocks edge cautiously higher after US non-farm payroll came in mixed with strong job creation but slower than expected average hourly earnings growth. SVB Financial falls further.

US futures

Dow futures +0.07% at 32868

S&P futures +0.13% at 3987

Nasdaq futures +0.05% at 12162

In Europe

FTSE +0.17% at 7925

Dax +0.4% at 15618
 

311k jobs added, unemployment drops to 3.6%

US stocks are pointing to a stronger start after a Goldilocks nonfarm payroll which saw stronger-than-expected job creation but a rise in unemployment and a smaller-than-expected increase in average wages.

311k jobs were added in February, well ahead of the 205k forecast, and January’s blowout of 517k jobs were downwardly revised to 505k.

Meanwhile, unemployment ticked higher to 3.6% up from 3.4%, and average hourly earnings rise from 4.4% in January to 4.6% in February this was less than the 4.7% expected. On a monthly basis, average hourly earnings grew at a slower pace of 0.2%.

This report would likely please the Fed it shows that job creation remains strong while, at the same time, average hourly earnings are growing at a slower pace.

The data comes after the Federal Reserve chair earlier this week sounded a hawkish warning that interest rates may need to rise at a faster pace and stay higher for longer. Expectations of a 50 basis point hike slipped to 54% following the release from around 70% mid-week.

Gains in stocks could be limited as investors continue to assess the fallout from the SVB share sale yesterday, which sent capitalization worries across the sector.
 

Corporate news

SVB falls 44% pre-market, adding to Thursday’s losses after the tech lender announced a share sale yesterday following a $1.8 billion net loss and negative guidance hurt by the impact of higher rates.

Oracle fell 4.9% after the software giant missed quarterly revenue estimates remained its recent acquisition of Cerner will boost futures sales.
 

Where next for the Dow Jones?

After running into resistance at the 50 sma at 33575, the Dow plunged lower, taking out the 200 & 100 sma. The RSI supports further downside. A break below 32000 is needed to extend the bearish trend towards 31700, the November. A break below here could see a sell-off gather momentum. On the flip side, buyers could be encouraged by the long lower wick suggesting that demand was weak at the lower levels. Buyers first need a rise above 32500 the 200 sma to extend gains towards 33000 round number.

(Click on image to enlarge)

FX markets – USD falls, EUR jumps

The USD is falling following the US nonfarm payroll report, which was a mixed bag with strong job creation but weekend than expected average wage growth.

EUR/USD is rising as the USD drives the pair in a data-quiet day in Europe. After digesting the NFP, investors will be looking ahead to the ECB President Christine Lagarde, who is due to speak today & at the ECB meeting next week.

GBP/USD is rising, boosted by stronger-than-expected UK GDP data, which showed that the UK economy grew at 0.3% MoM in January. This was above the 0.1% forecast and a strong rebound from the -0.5% contraction in December. The daytime helped ease recession fears in the UK but is unlikely to impact the BoE’s monetary policy decision in a few weeks.

EUR/USD +0.5-% at 1.0640

GBP/USD 0.9% at 1.2053
 

Oil is set for a 5% weekly decline

Oil prices are edging lower and are expected to drop around 5% across the week, the steepest weekly decline since early February on fears that steep interest rate hikes in the US could slow economic growth and hit the oil demand outlook hard.

Federal Reserve chair Jerome Powell warned of higher interest rates for longer. While optimism surrounding the economic recovery in China had been supporting oil prices, the weaker-than-expected GDP forecast unveiled at the start of the week has knocked this optimism slightly.

WTI crude trades -0.9% at $75.10

Brent trades at -0.73% at $80.75
 

Looking ahead

15:00 ECB Lagarde to speak

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