Services PMIs rolled in from around the world over the past couple of days, giving markets more economic data to chew on. The main Eurozone figure fell in line with predictions at 48.9, meaning the services and manufacturing sectors are now both in contraction for the common currency area. The figure for Germany was particularly grim, falling to its lowest level since 2022 with a 47.1 print. In China, the index fell dead on predictions at 51.1, a slight improvement on the previous month. Over in the US meanwhile, the services PMI came in at 53.7, beating expectations and marking a sharp rebound from the April figure.
Sadly, the good news did not extend to the US labour market. The ADP employment change missed consensus by a country mile on Wednesday, falling to just 37k new jobs versus expectations of 115k. Not exactly a thrilling report, but by and large markets are more interested in the NFP numbers set for publication later today. While the two reports often provide conflicting information, the ADP numbers do not bode well. Should the NFP report prove to be anywhere near as bad, there will be significant ripples throughout markets later today. Of course, poor employment figures are one of the necessary stepping stone towards lower interest rates. The US labour market has been remarkably resilient up until this point but a strong shift could force the Fed’s hand. Current predictions are set at 130k new jobs and unemployment holding steady at 4.2%.
In other news, Tesla stock (TSLA) reacted miserably to the unfolding spat between founder Elon Musk and president Trump yesterday. Musk has been extremely vocal in his criticism of Trump’s spending bill, complaining that it completely erases all the savings painstakingly achieved by the DOGE initiative. Things escalated on Thursday when Trump argued that the easiest way to save money would be to terminate the government subsidies and contracts enjoyed by the electric car manufacturer. The back-and-forth pushed Tesla (TSLA) stock down 14% by yesterday’s close, dragging the S&P 500 and Nasdaq indices down along with it. Fun times.
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