Oil and gas prices plunged to June lows, small non-farmers showed weakness in the U.S. labor market, focusing on preliminary data

Asian stocks reflected Wall Street's weakness on Wednesday, while US Treasuries rallied to stabilise after new data showed a weak labour market and oil sent commodity prices tumbling en masse. Japanese and Australian stocks opened lower and benchmark futures contracts in Hong Kong also fell. The move came after the S & P 500 Index fell for a third straight session, its longest decline since October. US futures markets were little changed in early Asian trading.

On Thursday (December 7), Asian stock markets reflected weakness on Wall Street, while U.S. Treasuries rebounded and stabilized after new data showed a weak labor market, and oil caused commodity prices to plunge en masse.

Stocks in Japan and Australia opened lower and benchmark futures contracts in Hong Kong also fell after the S & P 500 Index fell for a third straight session, its longest decline since October. US futures markets were little changed in early Asian trading.

US Treasuries were mostly flat on Thursday after a one-day rally in long-dated bonds pulled 10-year yields to 4.1 per cent, the lowest since August. Short-dated Treasuries were also little changed in early Asian trading after the yield on policy-sensitive two-year bonds edged up to 4.6 per cent on Wednesday. Australian bond yields followed the decline in US Treasuries and edged lower.

Wednesday's move reflected in part a weaker-than-expected ADP in the US private jobs data, indicating weakness in the labour market. This was released ahead of Friday's US jobs report.

Peter Boockvar, author of the Boock Report, said: "The hiring slowdown continues and is becoming more pronounced. What I'm most looking at right now is the trajectory of economic activity, and what I'm seeing is a slowdown in a number of places, including the labour market right now."

A key indicator of raw material prices fell to its lowest level since August 2021 as oil and gas prices plunged. Despite OPEC +'s plan to cap oil production until 2024, there were signs that global supply was outstripping demand, with oil prices falling for five straight days, sending prices to their lowest level since June.

The dollar index stabilised on Thursday after hitting a three-week high amid weakness in Asian trading.

Federal Reserve policymakers will meet next week for the last time in 2023. While no change in the federal funds rate target is expected, they plan to release quarterly forecasts that could change market expectations. Those bets have been tilting towards more easing next year due to weaker-than-expected economic data.

Earlier on Wednesday, markets fully digested the impact of six 25 basis point rate cuts by the European Central Bank in 2024, a move that would bring the key rate down to 2.5%. Despite a slight reduction in bets later in the day, Deutsche Bank revised its outlook to a 150 basis point rate cut, thereby stimulating dovish sentiment.

Prashant Newnaha, rates strategist at TD Securities, said: "Inflation concerns are receding. Central banks think they have clearly done enough and may need to cut rates, otherwise real rates may be too high and restrictive."

Meanwhile, the Bank of England stepped up its warning against hedge funds shorting Treasury futures, saying its net position measure is now higher than it was before the "cash-dire" crisis in March 2020.

Net short positions have risen to $800 billion from about $650 billion in July, the Bank of England said, citing data from the Commodity Futures Trading Commission, indicating a surge in so-called basis trading as investors seek to exploit the spread between futures and bonds.

In corporate news, Apple is preparing several new models and upgrades for early next year to reverse declining Mac and iPad sales, according to people familiar with the matter. Meanwhile, AMD is targeting emerging markets dominated by Nvidia with new so-called accelerator chips in response to the artificial intelligence boom.

Elsewhere, gold held steady after edging higher in the previous session.

Thursday trading day focus and weather vane:

① 10:00 China's November trade account

② 14:45 Switzerland's seasonally adjusted unemployment rate in November

③ 15:00 Germany's monthly rate of quarterly adjusted industrial output in October, the UK's Halifax monthly rate of quarterly adjusted house price index in November

④ 15:45 France's October trade account

⑤ 18:00 Eurozone third-quarter GDP annual rate final value, Eurozone third-quarter quarterly adjusted employment rate

④ 20:30 The number of layoffs by challenger companies in the United States in November

The number of initial jobless claims in the United States for the week ending December 2 at 21:30

< unk > 23:00 U.S. wholesale sales monthly rate in October

23:30 U.S. EIA natural gas inventories for the week ending December 1

Analysis of major currency trends:

EUR: EUR/USD fell, closing at 1.0764, down 0.30%. Technically, the preliminary resistance to the upside is at 1.0792, further resistance is at 1.0821, and key resistance is at 1.0838; the preliminary support to the downside is at 1.0746, further support is at 1.0729, and more critical support is at 1.07.

GBP: GBP/USD fell, closing at 1.2559, down 0.24%. Technically, the preliminary resistance to the upside of the exchange rate is at 1.2595, further resistance is at 1.2635, and key resistance is at 1.2657; the preliminary support to the downside of the exchange rate is at 1.2532, further support is at 1.2510, and more critical support is at 1.2470.

Yen: USD/JPY rose, closing at 147.309, up 0.11%. Technically, the preliminary resistance to the upside of the exchange rate is at 147.565, further resistance is at 147.826, and the key resistance is at 148.163; the preliminary support to the downside of the exchange rate is at 146.967, further support is at 146.63, and more critical support is at 146.369.