By Geoffrey Smith
Investing.com -- The U.S. releases its official labor market report for October, which is expected to show that hiring slowed again last month as the economy cooled. That's a picture that's being corroborated in real time with the announcement of layoffs and hiring freezes at some high-profile technology companies. Chinese stocks roared to their best week in 11 years as hopes grew for an end to the Zero-COVID policy. That's dragged up commodity prices and mining stocks in its wake. Elon Musk is set to swing the axe at Twitter, but a chunky list of big-name advertisers has already beaten him to the punch. Here's what you need to know in financial markets on Friday, 4th November.
1. Jobs report set to show hiring slowdown
U.S. employers hired more workers than expected in October, but a rise in the unemployment rate to 3.7% suggested some loosening in labor market conditions, which would allow the Federal Reserve to shift towards smaller interest rates increases starting in December.
Nonfarm payrolls increased 261,000 last month, the Labor Department reported on Friday, while September was revised up to 315,000 jobs added, from 263,000 previously reported. Economists polled by Reuters had forecast 200,000 jobs. The unemployment rate increased to 3.7% from September's 3.5% and average hourly earnings increased 0.4% after rising 0.3% in September.
2. The China pivot story is back on
The jobs numbers may struggle to revive the Fed pivot story, but the Zero-COVID pivot story in China is alive and well after two seemingly important pieces of news overnight.
Bloomberg reported that Chinese authorities are looking at scrapping a system that penalizes airlines for bringing COVID-carriers into the country, while one of the country's top epidemiologists told an investment conference that he expects substantial changes to the policy within five or six months.
Hong Kong's Hang Seng leaped another 5.4% on the news, rounding off its best week in 11 years on hopes that a policy that has been a big drag on growth this year will finally be scrapped (even if the country's health regulators aren't willing to say so in public yet).
Base metals and mining stocks also soared.
3. U.S. stocks lifted by Chinese news; PayPal's outlook disappoints
U.S. stock markets are set to open higher, helped by the prospect of a pivot in China. The news of layoffs at Lyft (NASDAQ:LYFT) and Stripe, along with a partial hiring freeze at Amazon (NASDAQ:AMZN), has also emboldened expectations of a weak payrolls report that ought, ultimately, feed through into a more gentle Fed policy.
By 06:25 ET (10:25 GMT), Dow Jones futures were up 170 points or 0.5%, while S&P 500 futures were up 0.7%, and Nasdaq 100 futures were up 0.8%. The three major cash indices are nonetheless all on course for a weekly loss, thanks to the selloff that followed the Fed's hawkish press conference on Wednesday.
Stocks likely to be in focus later include Starbucks (NASDAQ:SBUX) and PayPal (NASDAQ:PYPL), both of which beat expectations with their quarterly numbers late on Thursday. Although in PayPal's case, it was a disappointingly weak revenue forecast that grabbed the eye. Duke (NYSE:DUK), AES (NYSE:AES), and Dominion Energy (NYSE:D) are all due to report early, as are Cardinal Health (NYSE:CAH) and troubled FuboTV (NYSE:FUBO).
4. Musk set to announce Twitter job cuts as advertisers pull back
The scale of Elon Musk's axe-swinging at Twitter (NYSE:TWTR) will become clear, amid swirling rumors that the Tesla (NASDAQ:TSLA) CEO wants to lay off as much as half of the company's 7,500 staff.
"In an effort to place Twitter on a healthy path, we will go through the difficult process of reducing our global workforce on Friday," Musk wrote in an email to staff on Thursday.
The company certainly seems to be facing straitened circumstances going forward, as big-name advertisers including L'Oreal (EPA:OREP), Mondelez (NASDAQ:MDLZ), Volkswagen (ETR:VOWG_p), Audi and General Mills (NYSE:GIS) have all suspended placements with Twitter this week on concerns at Musk's content policy. The company's Chief Commercial Officer Sarah Personette, who was responsible for contacts with advertisers, has also quit.
5. Oil lifted by Chinese news; rig count, CFTC numbers due later
Crude oil joined the rally sparked by the news out of China, surging overnight to its highest in nearly four weeks.
By 6:35 ET, U.S. crude futures were up 3.2% at $91.03 a barrel, while Brent was up 2.8% at $97.36 a barrel.
The rise in prices is a reflection of how poorly equipped the world oil market is to deal with a meaningful rise in Chinese demand, given the lack of spare capacity. Baker Hughes' rig count and the CFTC's positioning data later may cast further light on that.