ZFX: Horrible ADP! Risk off ready
Wednesday (May 6) news review
- Oil prices finally closed lower, ended the rally of five consecutive days. The June contract for WTI crude futures was facing obvious bearish correction after jumping above the $26 mark. The inventory report of EIA showed that the distillate stockpiles surged over 9.5 million barrels, far exceeded market expectations, which dampened the rebound of oil prices.
- President Trump said that he would review the Phase 1 trade deal signed in January, whether China has fulfilled the commitment regarding the purchase of US goods. He said that he is able to issue a report within a week or two. Investors were worried about the tension between China and the US after the news, triggering the market move.
- Members in the Fed are not that optimistic about the outlook of the US economy. Louis Fed leader James Bullard said that the US unemployment rate may rise to 20% or even higher. Dallas Fed President Robert Kaplan also predicts that the US economy will contract sharply by 25-30% in the second quarter, and the unemployment rate will soar to 20%.
- The ADP report, showing US private payrolls, in April was the worst in history. Over 20 million jobs were lost, which was the biggest job loss ever, that predicting a pessimistic result to the Nonfarm payrolls on Friday. Although the figures is horrible, it was still not bad as expectations.
- The global new coronavirus outbreak have recorded over 3.8 million confirmed cases, with more than 260000 deaths.
ZFX analyst Jacob Leung said that, oil prices finally retraced and the market sentiment turned a bit negative on Wednesday, and the ADP figures also “more or less” triggered the safe-haven demand. Pay attention to the strength of the greenback, which is likely to reflect change in the market sentiment.
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