It’s NFP week, but instead of focusing solely on jobs data, markets are once again navigating headlines sparked by the U.S. President’s bold declarations — including his recent comment, “I run the country and the world,” which quickly grabbed attention in The Atlantic. On the international front, Chinese social media has erupted with memes and the hashtag #Trumpchickenedout, in reaction to his remarks suggesting tariffs on Chinese goods “will come down substantially — but it won’t be zero.”
Fearing an imminent bombshell on the automotive industry, the Trump administration rescinded the application of its brutal reciprocal tariffs… again. That’s all it took for the stock markets to decompress. The Dow Jones Industrial Average (DJIA) added 0.7%, with the potential to extend its longest winning streak this year.
Other key benchmarks, including the S&P 500 and the NASDAQ Composite, each advanced 0.4% and 0.3%, respectively. This marks a significant upswing following a lacklustre performance on April 29.
As optimism returned to the markets, investors pivoted from safe havens like the 10-year yield, which slumped 4.18%, before settling to 4.21%.
Corporate earnings set the tone on Tuesday. Amid this flurry of bewildering statements from President Trump and tariffs back and forth, General Motors (GM) postponed its earnings conference call until Thursday, allowing the board time to reflect on any impending tariff moves from the White House.
In light of Trump’s tariffs, Spotify (SPOT) and Coca-Cola (KO) were also among the companies reporting their earnings during pre-market hours, being closely watched by investors. Coffee maker Starbucks (SBUX) was next in line to report its earnings on April 29.
Coming in after hours, the figures were below Wall Street estimates as the US President’s trade war threatens to thwart new CEO Brian Nicol’s plans. The stock took a tumble immediately in after-market trading.
Could the economic picture be any less unnerving?
On May 2, the US Bureau of Labor Statistics will release its Nonfarm Payroll Report (NFP). Caught in the crosshairs of trade war and a shaky, to say the least, economic situation, the labour market will likely reflect the immediate effects of business uncertainty.
Declining consumer confidence and a cooling labour market
While tariffs keep corporations en pointe, consumer confidence keeps dropping. Declining for the fifth consecutive month, the Conference Board’s Consumer Confidence Index for April came in at 86, below expectations and significantly lower than its March level of 92.9.
Job openings also took a tumble in March and are trending near a more than four-year low as the labour market continued to show signs of slowing down. According to the latest Job Openings and Labor Turnover Survey (JOLTS), the ratio of job openings to unemployed workers hit a new low in March since the post-pandemic labour market recovery at 1.02%.
While this figure may not be alarming per se, put into the current economic context, it paints a clearer picture. According to Wells Fargo senior economist Sarah House, “The resumption of this ratio’s decline in the past month is reflective of a steady weakening in labor demand.”
Of note, this March reading came in before Trump launched his all-inclusive tariff plan. That said, it only serves as a reminder that the job market had started cooling before Trump’s tariffs were a threat.
The US labour market is currently in a delicate state, which makes it vulnerable to any headwinds should the outlook deteriorate. However, despite the gloom and doom pervading every corner of the US business sector, the Employee Commitment and Motivation Index edged 2 points higher in April, global payroll processor ADP notes.
This increase marks a recovery from March’s dip to match a high of 129. The real estate sector showed the strongest improvement, gaining 28 points to reach 124, the highest level since September.
Professional, scientific, technical and construction services also posted an upward trend, while manufacturing displayed the sharpest decrease since October. All things considered, there’s a 50-50 chance that the upcoming NFP figure may disappoint. What’s your take?
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