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Payrolls, Bitcoin $40k, Hyundai's Apple Gaffe - What's up in Markets

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·4 min read
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By Geoffrey Smith

Investiing.com -- Donald Trump disavows his supporters’ violence as Democrats call for his immediate removal from power. Nonfarm payrolls are set for their worst number since May, Hyundai gets ahead of itself in announcing talks with Apple over car manufacturing, and (Bitcoin) hits $40k, less than a month after hitting $20k. Here’s what you need to know in financial markets on Friday, January 8th.

1. Trump changes tack; Dems press for removal

President Donald Trump turned on his supporters, disavowing the lawlessness and violence of Wednesday’s storming of the Capitol, which followed directly from a rally that he addressed earlier in the day. Five people, including one police officer, died during the riot.

Democratic Party politicians including the new Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi both called for Trump’s immediate removal, threatening new impeachment proceedings if Vice-President Mike Pence doesn’t invoke the 25th Amendment to strip Trump of his office.

The threat seems largely empty. Pence was reported by various outlets as being opposed to using the 25th Amendment, while impeachment would still need the support of 16 Republican Senators.

2. Bitcoin hits $40k, Copper hits 8Y high

The broad global rally in risk assets continued, with European and Asian stocks both following the U.S. higher and copper posting a new eight-year high.

However, the dollar corrected upwards modestly and Treasury bond yields rose to their highest in 11 months after Philadelphia Fed President Patrick Harker said the Federal Reserve may look at tapering its bond purchases toward the end of this year. His comments were contradicted later by Cleveland Fed President Loretta Mester. Neither is a voting member of the Federal Open Markets Committee this year, however.

The dollar index rose 0.1% to 89.88 by 6:30 AM ET (1130 GMT), while the 10-year Treasury yield was at 1.08%, having earlier risen as high as 1.10%. Bitcoin, meanwhile, topped $40,000 for the first time ever, less than a month after hitting $20,000 for the first time.

3 Stocks set to open higher; stimulus hopes sustained

U.S. stocks are set to open higher, still supported by expectations of greater government spending and continued accommodation from the Fed.

By 6:30 AM ET, Dow Jones futures were up 97 points, or 0.3%, while S&P 500 futures were up 0.4% and Nasdaq Composite futures were up 0.5%.

Among the stocks likely to be in focus later are Boeing (NYSE:BA), which said it would take a $2.5 billion charge against earnings to settle allegations of misleading U.S. authorities over its 737 MAX program, and Apple (NASDAQ:AAPL), which was the subject of a bizarre series of press releases from South Korean carmaker Hyundai (OTC:HYMLY) overnight, Hyundai stock rose 19% in Seoul after the company said it was in early stage talks about possibly manufacturing a car for Apple. However, it revised its statement twice, ultimately removing the iPhone maker from the release entirely.

4. Payrolls set for smallest gain since May - or worse

The U.S. labor market probably had its weakest month since the spring disaster in December. Nonfarm payrolls are expected to have risen by only 71,000 through the middle of last month, as spreading restrictions on the services sector due to the pandemic hit hiring virtually everywhere.

The risk is for a downside surprise, given that payrolls processor ADP estimated that private employment shrank by 123,000 in the period. The unemployment rate is expected to have risen to 6.8% of the workforce, from 6.7%. The government will release the numbers at 8:30 AM ET as usual.

Data overnight had shown German industrial production, exports and imports all exceeding expectations - albeit only for November, before the latest surge in the Covid-19 pandemic. Both Germany and the U.S. posted record numbers of deaths from the disease on Thursday.

5 Oil surges again on spot buying; LNG at record high

Crude oil prices surged higher again, hitting their highest levels since mid-February on confidence that Saudi Arabia’s unilateral action to balance the market will keep prices supported until the worst of the seasonal impact from the pandemic is past.

By 6:40 AM ET, U.S. crude prices were up 1.3% at $51.52 a barrel, while Brent futures were up 1.5% at $55.20 a barrel.

Prices were supported by reports of heavy buying in the spot market by Unipec, while a cold snap in Asia has also lifted liquefied natural gas prices to a record high.

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