US job openings plummet to new lows

2nd December 2023 – 9th December 2023 | Another week in the markets

S&P 500	Nasdaq	VIX	DJIA	Russell 1000	NYSE
4,604.37	14,403.97	12.35	36,247.87	2,525.73	16,207.76
0.21%	0.69%	-2.22%	0.01%	0.22%	-0.34%
Nifty 50	Gold	Silver	Brent crude	USD-INR	EUR-INR
20,969.40	$2,020.80	$23.29	$75.65	83.44	89.82
3.46%	-3.39%	-10.06%	-4.91%	0.32%	-0.78%

Source: MarketWatch 

Hello Saturday,

This week, US job openings plummet to new lows, RBI maintains status quo on repo rate for the 5th time and oil prices tumble as global demand weakens.

• US job openings plummet to new lows in October underscoring the fact that the higher interest rate regime unveiled by the Federal Reserve is succeeding in cooling the labour market
• The Reserve Bank of India re-emphasizes its commitment to tamping down on inflation, opting to maintain the benchmark policy repo rate at 6.5% for the fifth time in a row
• Oil prices report losses for the seventh straight week as global demand remains muted and US output hovers near record highs of 13 million barrels per day
• Expectations of an interest rate cut and an anticipated launch of exchange-traded spot bitcoin funds sent bitcoin soaring above the $42,000 level- a price point it had last attained in April 2022
• AMD opens a new battlefront against Nvidia with the launch of its Instinct MI300 chips, which the former claims upstages Nvidia’s front-runner H100 chip

Taking stock | A mixed bag | Tightrope walking | Oil spill | Invest wisely | Another week in the markets

Taking stock

All three major US indices gained for the sixth straight week on the back of jobs data coming in hotter than anticipated. The non-farm payroll employment data cemented the soft landing narrative, prodding the Dow to close 0.1% higher. The S&P 500 eked out a gain of 0.2%, while Nasdaq moved up by 0.7%. 

A mixed bag

The non-farm employment payroll data released on December 5th turned out to be a mixed bag. US firms collectively posted a demand for 8.7 million jobs in October, a significant reduction from the September figure of 9.4 million job openings. 

Nevertheless, the drop in job openings in October made for marginal relief, considering that openings have floated above the 8 million mark for 32 months straight –– a threshold that was never breached before 2021.

Seen from a bird’s eye view, the lacklustre jobs data explains the marginal uptick in the three major indices – Dow, Nasdaq, and S&P500 – all of which ended the week with gains of less than a percentage point.

The fall in job openings was particularly glaring in the healthcare and social services domain, which reported 236,000 job openings being axed. Jobs in the banking, insurance, and real estate domains also took a beating, with employment opportunities down by a sizable 217,000. Lastly, job openings in restaurants and bars were down by 124,000.

However, the jobs data did promise light at the end of the inflationary tunnel. Looking from a glass-half-full perspective, the soft landing narrative concretised this week. Resiliency in the labour markets alongside cooling inflation kindled hopes that the Federal Reserve just might be able to tamp down on price hikes without pushing the US economy into a recession.

Non-farm payroll employment over-the-month change, seasonally adjusted, November 2021 to November 2023

Source: US Bureau of Labor Statistics

Tightrope walk

India’s central bank opted to maintain the benchmark policy repo rate at 6.5% for the fifth time in a row, emphatically signalling its intent to rein inflation to below 4% levels.

Retail inflation hit a four-month low of 4.87% in October. The central bank has estimated inflation to be at 5.6% this quarter.

The RBI’s Monetary Policy Committee also revised the GDP growth rate projection from 6.5% to 7% in the latest meeting. In a gloomy global macro-economic scenario, RBI, alongside the IMF and the World Bank have repeatedly marked out India as an outlier as far as GDP growth is concerned. 

The RBI warned against the possibility of a sudden inflationary hike in November and December on account of higher-than-expected vegetable prices and elevated sugar prices across the globe.

RBI governor Shaktikanta Das also struck a cautious note, highlighting that the global economic outlook was clouded with too many uncertainties, adding that the “future looks fickle and new shocks can hit the economy at any time.”

Oil spill

Oil prices continued to operate under pressure as weak Chinese demand scuttled any possibility of a price hike, effectively resulting in seven straight weeks of declines. 

Exacerbating the fall in the two major benchmarks – the Brent Crude futures and U.S. West Texas Intermediate Crude futures – was the dual impact of excessive supply from the US and weak economic indicators emerging from around the globe.

Chinese crude oil imports tumbled by 9% in November, raising fears that crude oil demand may not revive anytime soon in the coming quarters. Meanwhile, the US pressed ahead with its oil production, churning out 13 million barrels per day, teasingly close to its record highs.

Complicating the plot further, Saudi Arabia and Russia on December 7th urged the member nations of the Organisation of Petroleum Exporting Countries and its allies to cut back on oil production voluntarily “for the good of the global economy.”

OPEC+ members pump out a little over 40% of the total global oil output. As per the proposed agreement between OPEC+ members, the group will undertake voluntary cuts of 2.2 million barrels per day, over and above the cuts led by Saudi Arabia and Russia, amounting to 1.3 million barrels per day.

However, market experts have suggested that not many of the OPEC+ allies will likely undertake voluntary oil production cuts. 

Bitcoin bull run

Bitcoin took to the skies this week, shedding the pessimism bogging down the cryptocurrency in the aftermath of the collapse of FTX and other business ventures. Media reports in October also indicated that the US market regulator, the Securities and Exchange Commission, won’t be filing an appeal against a court ruling that held that the agency was wrong for junking a spot Bitcoin ETF application.

Earlier this week, on Monday, Bitcoin reached levels of $42,162 – its highest since April 2022 – on the back of interest rate cut expectations that are building up within the US economy.

The Bitcoin buoyancy rubbed off on the shares of other cryptocurrency-affiliated companies as well. Coinbase and Microstrategy jumped by close to 7%, whereas Bitcoin miners like Riot Platforms, Marathon Digital, and CleanSpark surged between 7% and 13%.

Ether, another major cryptocurrency, with a massive following worldwide also rose by more than 6% on Monday, closing above the $2,274.88 level. However, long-term investors will be far from delirious as the new bull run paces ahead. Both Bitcoin and Ether are still lagging behind the lifetime highs of $69,000 and $4,868 respectively.

Chipping away

Chip manufacturer AMD blew the battle bugle this week after it launched its Instinct MI300 chips, posing the biggest challenge that the company has mounted against Nvidia’s AI supremacy.

The company claims that its newest launch outpaces Nvidia’s H100 flagship chip in key AI parameters and memory capabilities.

The MI300 chip is finding support from a lot of quarters. Dell Technologies reportedly said that its MI300 servers are available currently. Other vendors like HP Enterprise, Lenovo, and Supermicro said that they will be releasing their MI300 designs in the coming months.

The MI300 chip will also be powering the soon-to-be-released virtual machine instances by Microsoft Azure and Oracle cloud infrastructure.

Invest wisely 

Volatility is the name of the game when it comes to winning in the markets. The global rate hike cycle unleashed by the US Federal Reserve has tested the strength of economies around the world. The Indian economy is no exception. While inflation seems to be coming down, it is still far from completely vanquished. In the meantime, millions in India are maximising returns for themselves by investing in the US markets with the Appreciate app. Investing in the US markets has never been this simple, seamless and straightforward.

Warm regards,
Another week
in the markets