Pre-Market ReviewEmployment Data Key for Economic Recovery

Markets in Asia felt the pressure on Wednesday’s session as China returned from its extended weekend break to post losses. The deterioration between the US and China’s relationship caused investors to worry. Oil prices remained steady on hopes that the easing of lockdown in many areas we’ll see demand pick up. Futures in the US and Europe looked favourable for the open. Employment data is still an important report investors and policymakers closely watch.

Markets have been afloat over the last few weeks. Governments will ease lockdown measures, and release strategies to reopen businesses.

Earnings and economic data will be in focus today. European PMI’s and the private jobs reading out of the US will take the headlines. Services PMI will be released from several European nations as well as the Eurozone as a whole this morning. If the UK’s reading was anything to go by we could be in store for dire reading. The service sector is incredibly important to many European economies. However, with the population on lockdown and businesses closed a poor reading comes as no surprise. Yesterday’s UK reading saw the pound and FTSE100 fall on the announcement.

Employment data key to recovery

US ADP payrolls are due for release later this afternoon. This number can be a precursor to the non-farm payroll reading a little later in the week. Expectations point to a dire reading with the number expected to fall by anywhere between 20m and 30m. The weekly initial jobless claims have painted a worrying picture of the US employment market. It showed that over 30m Americans have claimed unemployment benefit in the last six weeks.

Any economic recovery relies on a swift uptick in employment. All of the job numbers this week are important to the Federal Reserve and the White House. Both have already pledged trillions of dollars to help the economy.

The other worrying aspect of the jobs report will soon be the wages picture. Average hourly earnings have currently been holding steady for those who remain employed. However, a drop in this number would severely affect the recovery. The economy will depend on those still employed who will, hopefully, spend once the lockdown eases.

The Fed has already lowered interest payments. A drop in wages would be equally as damaging to any broad-based recovery.

Elsewhere we get earnings from US challenger brands Lyft and Peleton. These come after Disney earnings fell by 41% after the company announced that income felt the impact of the closure of its hotels, theme parks and cruises. However, there was good news surrounding the company’s new streaming service. This has now more than 54.4m subscribers making it Netflix’s closest competitor.