The Monday's range in Asian and European time is within the boundaries of 4,360 and 4,395 levels. Perhaps, neither the "buy dips" mood, nor the "sell upticks" may be considered predominant now.
What oddities are well noticeable even with a cursory glance at the American jobs report? With average preliminary expert expectations of about 500,000 new jobs, it contained only 194,000 jobs for the last months. Someone may ask, why not consider such a report as a negative one? This is exactly how it would have been interpreted if, at the same time, the unemployment rate did not immediately decrease by some miracle by as much as 0.4%, from 5.2% to 4.8%. Empirical observations of the past, however, indicate that even to reduce the unemployment rate by a couple of tenths of a percent, more than 500,000 new jobs would have to be created.
It turns out that even taking into account the revision of August data by 131,000 upwards, the clearly weak job figures do not logically combine with a sharp improvement in the percentage of unemployed. And indeed, the new jobs are weak for the second month in a row. Another juicy or embarrassing detail is that a 4.8% level for unemployment rate is just the Federal Reserve's (Fed) projection for the very end of the year, which was announced just three weeks before.
For now, according to TeleTrade analyst Ilya Frolov (https://www.teletrade.eu/pt), the Fed may easily choose two totally different approaches to see the reality. The Fed could choose whether to consider that 4.8% as a clear major step towards achieving full employment, which could entail the beginning of tapering monetary stimulus in December. Or another option for the Fed's chairman Jerome Powell and Co, they now have a reason to prefer relying on the excessively slow pace of job creation, which also allows to justify further intensive work of the so-called "Dollar printer" for another couple of additional months or even longer.
The unemployment rate of 4.8% sounds good, but strange just at the very moment when the big gains in payrolls seen over June and July (+850K and +943K) are left far behind. Therefore, to taper or not to taper is now just a matter of tastes of different Fed's members that may differ.
To summarize, the current week may become a time to relax and wait rather than a time for making strong decisions. There may be not much new food for thought than we would like to see, since the financial sector mainly comes out with quarterly reports, including the leading American banks, such as JP Morgan Chase and Goldman Sachs. Airlines, including Delta Airlines, are also reporting, being at the other pole, as their sluggish pace of recovery is also no secret to anyone, and even some improvement of the sector may not make a proper impression on the average market indicators.
TeleTrade analyst considers that, among other factors, renewed optimism in the Chinese stock market segment. The announced communication between the U.S. President Joe Biden's and Chinese leader Xi Jinping helps, as well as today's information that Administration for Market Regulation in Beijing fined the Tencent-backed company only by $534 million, causing its stock in Hong Kong to leap by 8.4% on Monday's open.
Ilya Frolov, Chefe de Gestão de Portfólio, TeleTrade