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DJ US Jobs Market Expected to Return to Growth in January -- Market Talk

· 02/05/2021 04:23

0923 GMT - Nonfarm payrolls in the U.S. are expected to rise by 100,000 in January after a fall of 140,000 in December, UniCredit says. The bank's estimate is higher compared with the consensus of economists polled by The Wall Street Journal, who expect payrolls to increase by 50,000. UniCredit's forecast is skewed to the upside following the ADP Research Institute's estimate that private-sector payrolls rose by 174,000 in January and better-than-expected jobless claims numbers, the Italian bank says. "With new Covid-19 cases peaking on Jan. 8 and falling quite quickly, along with some states either easing or planning to ease restrictions soon, payroll gains will likely accelerate next month," UniCredit says. The U.S. January employment report will be released at 1330 GMT. (xavier.fontdegloria@wsj.com)

0905 GMT - UniCredit doesn't rule out M&A and a merger with Banca Monte dei Paschi di Siena will be evaluated, the Italian bank's Chairman-Designate Pier Carlo Padoan told Italian daily La Repubblica in an interview. "We interpret Mr Padoan's words as an opening to M&A, where we see MPS as the most likely option, although we believe that an integration with Banco BPM would make more industrial sense," Intesa Sanpaolo analyst Manuela Meroni says. UniCredit shares rise 2.5%, while Monte dei Paschi is up 5.2%.(pietro.lombardi@dowjones.com; @pietrolombard10)

0903 GMT - Capital Economics' forecast that the eurozone economy rebounds strongly hinges on Covid-19 restrictions being lifted by the middle of the year, but vaccine supply shortages, distribution problems and concerns about variants could force governments to keep restrictions in place for longer, Andrew Kenningham, chief Europe economist at Capital Economics, says. Were restrictions kept for longer, Mediterranean countries are at greatest risk given that international travel will be among the last areas to be liberalized, Kenningham says. Capital Economics expects eurozone economic activity to start recovering in the second quarter and gain pace in 3Q, but Kenningham warns the risks are to the downside. (maria.martinez@wsj.com)

0902 GMT - Three positive factors will coincide in the coming weeks that should help the U.K. turn the tide on Covid-19, economists from Berenberg say. First, continued lockdown progress in reducing the number of cases--based on the recent five-day average, recorded infections could be at summer 2020 levels within two weeks. Second, the advent of spring and warmer weather by mid-March should bring with it the normal remission of seasonal respiratory viruses, Berenberg says. Finally, the vaccination of all high-risk groups by mid-March will also help, it says. "With luck, the U.K. can start easing restrictions from March onwards with the confidence that, even if cases started to edge up again, vaccination of the most-at-risk cohorts should prevent a serious surge in hospitalizations and deaths," Berenberg says. (xavier.fontdegloria@wsj.com)

0859 GMT - Sanofi's guidance for high single-digit earnings-per-share growth in 2021 is good news, Bryan Garnier says. However, foreign exchange is poised to reduce EPS by 5%, and assuming 8% growth this would lead to EPS of EUR6.04, which is slightly below consensus, the investment bank says. Sanofi's plans for additional cost savings of EUR500 million by 2022 is also good news, though it doesn't entirely come as a surprise, Bryan Garnier says. The French pharmaceutical giant previously said the pandemic has helped identify new sources of savings, and Bryan Garnier says this gives it confidence that Sanofi can reach an operating margin target of 30% by 2022. Sanofi trades 2.5% higher at EUR80.76. (cecilia.butini@wsj.com)

0839 GMT - Company earning results and U.S. labor data due later Friday will be at the centre of attention for credit investors, with both events signaling European credit market may end the week in positive territory, says UniCredit. "With investors focusing on the results of the earnings season and the U.S. employment report due out today, credit markets could remain on track for weekly gains, particularly in riskier parts of the credit spectrum," the Italian bank says. Credit spreads have narrowed this week across all credit scores, with riskier, lower-rated corporate bonds outperforming, it says. Economists polled by WSJ expect 50,000 jobs to have added in January in the U.S. (lorena.ruibal@wsj.com)

0831 GMT - Upbeat momentum in risk assets fueled by optimism about a U.S. economic-stimulus package and a vaccination-driven economic recovery is set to expand Friday from equities to credit markets. "Amid risk-on sentiment in broader markets, equity futures are trending higher once more this morning. We think that a positive tone will likely prevail in European credit markets today," says UniCredit.The pan-continental Stoxx Europe 600 opens 0.2% higher. Futures tied to the S&P 500 advance 0.2%, pointing to gains after the opening bell, while those of technology-heavy Nasdaq add 0.4%.(lorena.ruibal@wsj.com)

0820 GMT - A robust U.S. non-farm payroll report for January may weaken the dollar slightly but the currency is still likely to stay stronger against the euro, Commerzbank says. Positive labor market data could dampen expectations for large-scale U.S. fiscal stimulus to support the country's recovery, Commerzbank's Esther Reichelt says. However, the EU's recovery fund could turn out to be a damp squib in coming months, she says. The EU's difficulties are unlikely to end any time soon and U.S. lawmakers should approve further stimulus so the dollar should maintain the upper hand for now, she says. EUR/USD rises 0.1% to 1.1981, having earlier reached a two-month low of 1.1953, according to FactSet. The payrolls report is due at 1330 GMT. (renae.dyer@wsj.com)

0811 GMT - China's foreign-exchange reserves likely fell slightly to $3.215 trillion at the end of January from $3.217 trillion at end-2020, according to a median forecast of economists polled by The Wall Street Journal. The decline was mainly due to the valuations of forex assets, as the U.S. dollar strengthened last month, Standard Chartered economists say. Factors including rising bond yields and falling equity markets might have eroded mark-to-market reserve asset values, they add. The People's Bank of China is expected to release the data on Sunday. (singaporeeditors@dowjones.com)

0803 GMT - German manufacturing orders fell in December for the first time since April, but this doesn't change the fact that the manufacturing sector is still clearly on the road to recovery, Ralph Solveen, senior economist at Commerzbank. The 1.9% on the month decline is largely due to a significant drop in orders from the "other vehicle" sector, which is very volatile, Solveen says. Moreover, orders were still clearly above their pre-crisis level, he adds. "The upbeat sentiment among manufacturers until recently, as reflected in the Ifo business climate and the purchasing managers' index, signals that the trend in manufacturing continues to point clearly upwards," Solveen says. The manufacturing sector is likely to support the economy in the first quarter, he says. (maria.martinez@wsj.com)

0752 GMT - Germany's industrial orders fell in December, suggesting that the stricter lockdown, together with continuing lockdowns in other eurozone countries, has finally had a negative impact in the industrial sector, Carsten Brzeski, global head of macro at ING, says. Industrial orders are still 2.5% above their pre-crisis level and despite the pandemic, the year 2020 will be the first year since 2017 in which industrial orders recorded a positive year in terms of average monthly growth, Brzeski says. But the data show that the stricter lockdown measures have finally hit German industry and although this looks like a temporary breather, with the Chinese New Year break and lockdowns in many trading-partner countries, setbacks for industry seem hard to avoid. (maria.martinez@wsj.com)

0746 GMT - USD/SGD nudges higher in the afternoon Asian session ahead of tonight's U.S. jobs data. A stronger jobs report could underpin USD as it may reduce pressure on the Fed to ease monetary policy further, DailyFX.com says. The technical charts also show the DXY USD Index crossed above its 50-day moving average, and the index seems to have entered a bullish trend with the formation of a golden cross, DailyFX.com adds. USD/SGD is up 0.1% at 1.3380. (ronnie.harui@wsj.com)

(END) Dow Jones Newswires

February 05, 2021 04:23 ET (09:23 GMT)

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