Key facts
- US added 130,000 jobs in January, exceeding forecasts.
- Healthcare and social assistance drove US job gains.
- UK Q4 GDP growth was 0.1%, with services flat and construction down 2.1%.
- US rate cut expectations shifted to July.
- President Trump may withdraw from USMCA to gain leverage.
- A second US aircraft carrier is being deployed to the Middle East.
Market Snapshot
Clive Lambert of Futures Tech provided an update on market levels. The S&P 500 struggled to surpass 7,000, with the all-time high at 7,043. The DAX was shy of gap resistance at 25,322, while the Euro Stoxx 50 and FTSE 100 reached new all-time highs. US Treasury futures dipped to 128,39 on jobs numbers before recovering. Dollar/Yen eyed support at 152.09. Bitcoin fell back below $70,000, with potential retests of $58,000-$60,000 support. Gold hovered around $5,100. Silver tested $8.474 but pulled back. Palladium found sellers at $1,775. Copper was back above $1,330. Brent crude posted a shooting star candle at resistance of $70.58. European gas (TTF) saw a mixed session and faced sellers. European carbon markets showed volatility. Soybeans were bid again after a dip to $11.13, with soybean oil eyeing resistance at $5.80-$5.81. Wheat bulls saw gains, back above $5.40.
US Jobs Data Analysis
The US non-farm payrolls report showed an increase of 130,000 jobs in January, significantly beating the 70,000 expected and the whisper number of 40,000. The unemployment rate fell to 4.3%, and labor force participation rose to 62.5%. However, hosts Ryan and Michael Brown highlighted that the gains were heavily concentrated in healthcare (82,000 jobs) and social assistance (42,000 jobs), which they described as a mechanical increase rather than a sign of broad economic strength. Manufacturing added only 5,000 jobs, while financial services shed 22,000 and federal government employment fell by 34,000. The household survey presented a more positive picture, with falling unemployment and rising participation, which is key for the Federal Reserve's assessment of labor market slack. Markets adjusted, pricing out a March rate cut and fully discounting the first cut for July. The benchmark revisions also revealed an overcount of nearly a million jobs in 2025.
UK Economic Woes
The UK's fourth-quarter GDP data revealed sluggish growth, expanding by just 0.1% quarter-on-quarter, below forecasts. Year-on-year growth was 1%, down from 1.3% in Q3. The breakdown showed production rose 1.2%, largely due to the resumption of Jaguar Land Rover output after a cyber attack. However, the services sector, which constitutes 80% of the economy, was flat. The construction sector saw a significant contraction of 2.1%, the worst fall in over four years. This backward-looking data does not yet account for recent national insurance hikes and minimum wage increases. Political figures, including Rachel Reeves, were criticized for claiming economic improvement and attributing rate cuts to their policies, which the hosts argued were a response to a deteriorating economic outlook. Simon French of Panmure Liberium noted that GDP per capita has fallen for two consecutive quarters, and the UK economy is tracking below its average performance of the prior 14 years post-election.
Geopolitical and Corporate News
Reports emerged that President Trump has been considering withdrawing from the USMCA trade deal, a move seen by analysts as a tactic to gain negotiating leverage ahead of scheduled renegotiations in June. The US is also reportedly preparing to deploy a second aircraft carrier to the Middle East, in addition to the USS Abraham Lincoln. In corporate news, Schroeders was reportedly being purchased by a US firm, leading to a significant jump in its share price. Coinbase is set to report earnings after the closing bell.
Today's Data and Events
Today's data calendar includes weekly US jobless claims and existing home sales data. The US will also hold a 30-year bond auction. Several ECB speakers are scheduled to make remarks. Earnings reports are expected from Pinterest and Coinbase after market close.